Themoneyispaidinequal

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Unformatted text preview: 12,718.56 Discounted Cash Flow Discounted Cash Flow Valuation Chapter 6 Chapter Outline Chapter Outline Annuities and Perpetuities Present/Future Values of Uneven Cash Flows EAR and APR Annuities and Perpetuities Annuities and Perpetuities Defined Annuity – finite series of equal payments that occur at regular intervals If the first payment occurs at the end of the period, it is called an ordinary annuity If the first payment occurs at the beginning of the period, it is called an annuity due Perpetuity – infinite series of equal payments What is the difference between an What is the difference between an ordinary annuity and an annuity due? Ordinary Annuity 0 i% Annuity Due 0 PMT i% 1 2 3 PMT PMT PMT 1 2 3 PMT PMT Annuities and the Calculator Annuities and the Calculator You can use the PMT key on the calculator for the equal payment The sign convention still holds Ordinary annuity versus annuity due You can switch your calculator between the two types by using the 2nd BGN 2nd Set on the TI BA­II Plus If y...
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This document was uploaded on 01/14/2014.

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