FIN 363 Class 9

FIN 363 Class 9 - FIN 363 Class 9 Time Value of Money First...

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Unformatted text preview: FIN 363 Class 9 Time Value of Money First Exam Discussion • Mean Score 11:00 66.3 • Mean Score 12:30 70.7 • Mean Score 15:30 72.5 • t-value for Mean 11:00 equals Mean 15:30 =-4.8 (probability rounds to zero) • You’ve heard of six sigma standards as perfection; this is only slightly imperfect. First Exam Discussion • The statistical evidence makes it a virtual certainty that the University of South Carolina Honor Code was violated. • If a small number of cheaters had received information from a small number of cheating providers, the statistical evidence would not have picked it up. • This statistical result required widespread cheating. First Exam Discussion • I cannot identify with confidence who received information, in contradiction of the University of South Carolina Honor Code. • I cannot identify with confidence who provided information, in contradiction of the University of South Carolina Honor Code. First Exam Discussion • Therefore, I will not record and will not count scores from the first exam. Time Value of Money O bj1 0 INPUT S OUTP UT 3 10 -100 0 ? Here’s the setup to find FV: Clearing automatically sets everything to 0, but for safety enter PMT = 0. Set: P/YR = 1, END Financial Calculator Solution N I/Y PV PMT FV Steps and hints for your financial calculator 1. Identify the question that you want to answer. N, i%YR, PV, PMT and FV are the candidates. 2. Go to TVM (Main/Fin/TVM) 3. Clear the data from the registers (CLR DATA) 4. Choose ‘Other.’ Set frequency of compounding (1, 2, 4, 12 per year) and timing of cashflows (Beg/End). Press ‘Exit.’ Steps and hints for your financial calculator 5. Enter the 4 values that you know (PMT is zero for single cash flow problems). 6. FOLLOW THE SIGN CONVENTION! Money flowing out of your pocket has a minus sign. If you are investing today, PV is negative. If you are to pay a lump sum at the end, FV is negative. If you are borrowing today, PV is positive and PMT is negative. 7. Press the key for your missing value and record the answer. CONDUCT A SNIFF TEST! TVM_quiz.xls You should run this TVM quiz repeatedly until you can get all of the answers (except 8 and 9) correct. Questions 1-5 will be iClicker questions on Thursday and Questions 1-7 & 10 will be iClicker questions at the start of class on Tuesday. Three Ways to Solve Time Value of Money Problems Use Equations Use Financial Calculator Use Electronic Spreadsheet Solve this equation by plugging in the appropriate values: Numerical (Equation) Solution O bj1 0 1 PV = $100, r = 10%, and n =3 $133.10 0) $100(1.331 $100(1.10) FV 3 n = = = There are 4 variables. If 3 are known, the calculator will solve for the 4th....
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This note was uploaded on 09/28/2011 for the course FINA 363 taught by Professor Masoudie during the Fall '10 term at South Carolina.

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FIN 363 Class 9 - FIN 363 Class 9 Time Value of Money First...

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