Class 5 9-5 - Class 5 Combining Tools ISE2014 Click to edit...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Click to edit Master subtitle style Class 5 – Combining Tools ISE2014 Fall 2011
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Your Toolbox Cash Flow Diagrams F/P P/F P/A F/A A/P
Background image of page 2
Annuities Review Annuities are cash flows of equal value that occur in consecutive periods We have 4 tools for manipulating annuities P/A A/P F/A A/F
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Annuities Review A graduating high school senior is planning on attending college at a cost of $40,000 for each of the next 4 years At an interest rate of 3%, he/she wants to know the equivalent value of that tuition in today’s dollars
Background image of page 4
Annuities Review Draw a Cash Flow Diagram What are we looking for? $ Present Value Setup Problem Use P/A tool X0 = $40,000(P/A, 3%, 4) X0 = $40,000(3.7171)
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Differed Annuities Now suppose you’re the proud parent of a newborn You anticipate your child going to college for 4 years, but starting 18 years from now Let’s assume college will still cost $40,000 year and a similar 3% interest rate You want to know the equivalent value of that tuition in today’s dollars (18 years prior)
Background image of page 6
Differed Annuities How does this differ from the previous problem? Lets draw a Cash Flow Diagram to
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/04/2011 for the course ISE 2014 at Virginia Tech.

Page1 / 24

Class 5 9-5 - Class 5 Combining Tools ISE2014 Click to edit...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online