TimeValueofMoney1

TimeValueofMoney1 - 18:17 Chapter5 Pp.137150,160169...

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18:17 Chapter 5 Pp.137-150, 160-169 Q: 1,3,4,7 P: 1-4,7,10,12abc, 13,18 Time Value of Money I Lump sum PV and FV EAR and APR Definitions Time Line –  An important tool used in time value analysis; it is a graphical  representation used to show the timing of cash flows. Future Value (FV) –  The amount to which a cash flow or series of cash flows will grow  over a given period of time when compounded at a given interest rate. Present Value (PV) –  The value today of a future cash flow or series of cash flows.  Compounding –  The arithmetic process of determining the final value of a cash flow or  series of cash flows when compound interest rate is applied. Compound Interest –  Occurs when interest is earned on prior period’s interest.  Simple Interest –  Occurs when interest is not earned on interest. Opportunity Cost –

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This note was uploaded on 10/19/2011 for the course FINANCE 301 taught by Professor Nixon during the Fall '11 term at Miami University.

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TimeValueofMoney1 - 18:17 Chapter5 Pp.137150,160169...

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