Day 4-Part 3

Day 4-Part 3 - Business Management 301 Day 4: Part 2...

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Unformatted text preview: Business Management 301 Day 4: Part 2 Chapter 5: Part 2TVM June 30, 2011 Day 4: Part 2 Agenda 1) Makeup QuizzesHalf Credit 2) Personal Information Cards 3) Chapter 5: Part 2 Discussion 4) TVM Face-Off Competition Tuesday Chapter 5: Chapter 5: The Time Value of The Time Value of Money Money Future Value Future Value Compounding Problems Compounding Problems Future Value - Single Sums If you deposit $100 in an account earning 6% , how much would you have in the account after 1 year ? 1 1 PV = PV = FV FV = Mathematical Solution: FV = PV (1 + i) n FV = 100 (1.06) 1 = $106 Notice that there is one equation and four variables. What does this tell you about how much information you need? FVIF FVIF $100 $106 HOW ABOUT WITH THE CALCULATOR? Textbook Explanation: There is one equation and 4 variables. So, how many unknowns can you have? Possible Unknowns: I ( or r or k or I/Y) , PV, FV, N For almost all TVM problems, you simply play a 4 find 3 game. Three Steps : 1) Set-up your calculator (Clear Previous Data) 2) Enter the 3 known variables 3) Solve for the unknown Half of you will lose points on the exam because you ignore this slide! Two Problems : 1) Pmts per year: I will do all calculations in 1 P/Yr mode....
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This note was uploaded on 11/17/2011 for the course BUS M 301 taught by Professor Jimbrau during the Summer '11 term at BYU.

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Day 4-Part 3 - Business Management 301 Day 4: Part 2...

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