Problem Day Time Value of Money 2.6.12 v3.1 - clean

# Problem Day Time Value of Money 2.6.12 v3.1 - clean -...

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Unformatted text preview: Problem Day: Time Value of Money Housekeeping Items • Horizon POW Quiz due Tuesday at 10pm • EXAM 1 – Feb 16th and 17th o For your test score: SEE INSTRUCTOR • Ch. 15 Reading Quiz due Wednesday morning at 11am • Course email: [email protected] Exam Practice Questions • On blackboard under “Exam Practice Questions” • Take the quizzes as many times as you like – they DON’T count towards your grade • Questions and answers are in a slide deck below the quiz • Do the quiz first – looking at the answers first is less effective Today’s Agenda • Opening Prayer • Set up the Calculator • Basic Problems • Annuities o Annuities Due o Deferred Annuities • Tales from a Financial Analyst • Forecasting Sales 25% of Sales ! Hockey Stick POW Help: Aging Exhibit 5 Aging of A/P to Horizon Entertainment Symphony Systems Sound Average Amount Amount 145 days 3,190 * 105 days 38,884 30,656 75 days 19,975 56,815 45 days 85,326 34,607 14 days 73,122 14,170 \$220,497 \$136,248 *Disputed What is A/P Aging? What is A/R Aging? 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!!! Set up the Calculator • Clear All before EVERY 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 problem • Make sure Beg/End mode is correct o Clear All does NOT delete BEGIN Mode!!! • Payments per year • Number first, then top buttons Symbols PV = Present Value I/PY = Interest rate (Some books use r) n = Number of time periods PMT = Payment, Annuity FV = Future Value t Time Value of Money • What is the point? • The Key: • Good to know for: o Mortgages o Car Loans o “A dollar today is worth more than a dollar tomorrow” 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 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...
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## This note was uploaded on 02/17/2012 for the course FINANCE 301 taught by Professor Jimbrau during the Winter '12 term at BYU.

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Problem Day Time Value of Money 2.6.12 v3.1 - clean -...

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