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Unformatted text preview: t Four variables: FV, PV, r, t, given any 3 you can solve for the 4 th ! r = [FV/PV] 1/t – 1; t = = FV = PV (1 + r) t Special patterns: o Annuity: What is the PV of a series of cash flows C at the end of each of the next t years at r per year? ( a t year annuity of C at r)? PV = C x o Perpetuity: PV = C/r Compounding an investment m times a year for T years provides for future value of wealth: r = m x [(1 + EAR) 1/m - 1 ] EAR = (1 + ) m – 1 Annual Percentage rate: APR Special: non-constant interest rate, replace r with r 1, r 2, etc. Real vs. nominal rate: 1+real rate =...
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This note was uploaded on 02/25/2012 for the course CHEM 1341 taught by Professor Compton during the Fall '08 term at Texas State.
- Fall '08