Day 9-Ch 5-Part 3-TVM Face Off-9.28.11

Day 9-Ch 5-Part 3-TVM Face Off-9.28.11 -...

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Business Management 201 Day  9 Chapter 5: Part 3—The Time Value of Money TVM Face-Off September 28, 2011
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Day 9 Agenda 1) POW Quiz #4: Manning Case—Due Friday,  September 28 at 11:59 PM (Counts Double!)  2) Reading Quiz Chapter 15—Due Monday at 8:00 AM 3) Personal Finance I on Monday—Spouses Welcome 4) Next TA Sessions: TA Open Lab Session—Thursday 11:00 AM-12:00 PM  in 3108  JKB TA Open Lab Session—Friday 11:00 AM-1:00 PM in 184 TNRB TA POW Review Session—Thursday 5:00 PM-6:00 PM in 3714  HBLL 1) Chapter 5: The Time Value of Money 2) TVM Face-Off
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POW #4: Manning Case The Manning Case POW #4 is your first real  case; remember that it counts double! Be aware of your  decision framework : you are  the credit manager. Should you ship to both  clients, neither client, or just one of the clients? Key Insight:  you must look  inside  the ratios. Use net sales in ratio calculations.   Read case carefully for credit vs. cash sales. This case will turn on big issues. Look for fundamental differences. Don’t get bogged down in small details.
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Chapter 5:  Chapter 5:  The Time Value of Money The Time Value of Money
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Calculator Tutorial Let’s Take a Moment to  Examine Key  Calculator Functions… Home Row TVM Keys : N: # Compounding Periods I/YR: Interest per Year  [ Note:  Do NOT  use decimal form of interest.] PV: Present Value PMT: Payment FV: Future Value Important Calculator Keystrokes : Clear: Orange C All Payments per Year: 1 Orange P/Yr Digits Shown: Orange DISP 5 Mode : Orange BEG/END Inflows: Enter as POSITIVE # Outflows: Enter as NEGATIVE #
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My Calculator Tips Use the 5 Variables for TVM on “home row”  of calculator on each problem.    Only ONE unknown .  Enter value for other four  variables, although one of the variables will be  ZERO  for lump-sum problems.   Calculator TVM “Home” N: # Compounding Periods I/YR: Interest per Year PV: Present Value PMT: Payment FV: Future Value
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My Calculator Tips Five Step Process :   1)Verify Begin/End Mode  [Orange— BEG/END] 2)Clear Previous Data  [Orange—C  All] 3)List 5 Variables and Corresponding  Values on Paper 4)Enter the 4 Known Variables   [One  variable will often be entered as ZERO.]  5)Solve for the Unknown Variable Important Notes:  Keep calculator at 1 P/Yr!  Enter Inflows as  POSITIVE  and Outflows as  NEGATIVE !
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Perpetuities Perpetuities
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The PV of a perpetuity is very  simple to find: PMT  i PV  = Present Value of a Perpetuity
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The interest rate for a perpetuity is  very simple to find: PMT  PV  i  = Interest Rate for a Perpetuity
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Ordinary Annuity Ordinary Annuity  vs.  vs.
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This note was uploaded on 01/06/2012 for the course BUS M 201-1 taught by Professor Jennlarson during the Fall '11 term at BYU.

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Day 9-Ch 5-Part 3-TVM Face Off-9.28.11 -...

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