Problem Day Time Value of Money Blackboard

# Problem Day Time Value of Money Blackboard -...

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Problem Day: Time Value  of Money

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Housekeeping Items Horizon POW Quiz due Thursday at 5pm o The Question for the POW is found on page 5 of the Syllabus!! 2 POW Review Sessions this week.  Take your Pick: o Thursday at 5pm in room 210 o Friday at 8am in room 374 Ch. 15 Reading Quiz due Monday morning at 8am
Today’s Agenda Set up the Calculator Basic Problems Annuities o Annuities Due o Deferred Annuities Uneven Cash Flows

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Set up the Calculator Clear All
Set up the Calculator Clear All Make sure Beg/End mode is correct o Clear All does NOT delete BEGIN Mode!!!

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Set up the Calculator Clear All before EVERY new problem Make sure Beg/End mode is correct o Clear All does NOT delete BEGIN Mode!!! Payments per year o Set to 1 Payment per year
Set up the Calculator Clear All before EVERY new problem Make sure Beg/End mode is correct o Clear All does NOT delete BEGIN Mode!!! Payments per year Number first, then top buttons

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Symbols PV    =  Present Value  I/PY  = Interest rate (Some books use r) n       = Number of time periods PMT  = Payment, Annuity FV     = Future Value  t
Future Value of \$100 at 10% Year Beginning Amount Interest Earned Ending Amount 1 \$100.00 10.00 \$110.00 2 110.00 11.00 121.00 3 121.00 12.10 133.10 4 133.10 13.31 146.41 5 146.41 14.64 161.05 Total interest 61.05

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Interest on Interest Illustration
Value in 10 years of \$100 received today at  8% interest Formula: Excel : Calculator: Enter 10 as n or number of periods Enter 8 as i or interest rate Enter \$100 as PV or present value Push the FV (or future value) key = FV(rate,nper,pmt,pv,[type]) = FV(.08,10,0,100,0) nper = 10 payment periods pmt = \$0 payment each period pv = \$100 present value type = 0 for period end payments rate = 8% = - 215.89 n i) PV(1 FV + = 10 ) 08 . 1 ( 100 \$ = 89 . 215 \$ =

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Present value of \$100 received in 10 years at 10% Formula: Calculator: Enter 10 as n or number of periods Enter 10 as i or interest rate
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Problem Day Time Value of Money Blackboard -...

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