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350-04a_note[1] - 350-04a_note 11S TOPIC 4 TIME VALUE OF...

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350-04a_note, 11S Page 1 of 15 TOPIC 4: TIME VALUE OF MONEY (CHAPTER 5) I. Outline A. Introduction 1. Drawing Time Line 2. Finding the Time Value of Money B. Single CF C. Annuities 1. Ordinary Annuity 2. Annuity Due 3. Perpetuity D. Uneven CF E. Interest Rates F. Amortization II. Homework Assignment Chapter 5 Question 2-4, 7 Problem 10, 12, 13, 15, 16, 18, 19, 20-24, 31, 33 ================================================================ Class Notes I. Introduction (Case A) A. Drawing Time Line 1. Basics a) Show the timing of cash flows. b) Tick marks occur at the end of periods, so Time 0 is today; Time 1 is the end of the first period (year, month, etc.) or the beginning of the second period. 2. Example Single CF: $100 lump sum due in 2 years 0 I% 1 2 0 I% 1 2 CF 0 CF 1 CF 2 3 CF 3
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