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 
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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
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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
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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 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
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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
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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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