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Week%207-ACC381

# Week%207-ACC381 - CollegeofBusiness Information Systems...

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Name College of Business Information Systems Management / Accounting Information Systems Lab - Financial Impact of Loans and Investment Samantha Kleitsch / Lise Urbaczewski

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Loans! Understanding interest, principal, and amortization *** note: don’t borrow money if you don’t have to!! *** Today we will discuss calculating different interest calculations What is positive and negative cash flows? ( Why is this important to a business?? ) What is meant by future value and present value? Disclaimer: This is not “Everything you need to know about Finance in an hour” Property of L. Urbaczewski / S. Kleitsch
Focus Today: 1. Today we will discuss calculating different interest calculations 2. What is positive and negative cash flows? ( Why is this important to a business?? ) 3. What is meant by future value and present value? 4. What is amortization? Property of L. Urbaczewski / S. Kleitsch

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Simple interest Simple interest = Principal * Interest rate per time period * number of time periods Compound interest First year = Principal * Interest rate Second year = Principal plus Interest accrued * interest rate Third year = ?? Property of L. Urbaczewski / S. Kleitsch
Starting with a basic file…lets calculate payment (PMT) Property of L. Urbaczewski / S. Kleitsch

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We want to determine if we can afford our monthly payment… Monthly Payment? =-PMT(rate/12, 12*years, loan_amt) Why did I add a negative sign in front of –PMT? Total Interest? = 12*years*monthly_pymt – loan_amt Total Cost? = price + total_interest Property of L. Urbaczewski / S. Kleitsch
PMT function = PMT (rate, nper, pv, fv, type) Discuss each of these arguments (see page 362 in text) (see Fig 6.3 for example of usage) Property of L. Urbaczewski / S. Kleitsch

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Should have something like… Property of L. Urbaczewski / S. Kleitsch
With formulas….

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