Topics
Loan Payment Plans
Real Estate Investments
Principal Amount & Interest Amount in Loan
Payments
Deferred Payment Loans
Chapter 3
Borrowing, Lending, and Investing
3.2 Four Loan Payment Plans
1. Pay interest each period, but make no principal
pay

Topics
Cash Flow Diagrams
Discounted Cash Flow Models
1.
2.
3.
4.
5.
Single CF
Multiple CF
Uniform Series
Arithmetic Gradient Series
Geometric Gradient Series
Cash Flow Diagrams
Cash Flow Diagram (CFD) is a figure that shows the movement
of money in and

Topics
Nominal and Effective Interest Rate
Continuous Compounding
Four Loan Payment Plans
Nominal and Effective Interest Rate
Effective or Nominal?
15% per year compounded monthly
15% per year
20% per year compounded quarterly
2% per month compound

Chapter 3
Borrowing, Lending, and Investing
Topics
Deferred Payment Loans
Retirement
Equivalence
Variable interest rates
Deferred Payment Loans
Deferred Payment Loans
Repayment of loans does not always begin one interest period after
receipt of the p

Chapter 3
Borrowing, Lending, and Investing
Topics
Retirement
Equivalence
Variable interest rates
Bond Problems
Retirement Planning
Sooner is better than later in investing!
Remember the power of the exponent!
Start investing NOW!
Example 3.17
Imme

Example 2.10
How long does it take for money to double in value, if you earn 2% annual
compound interest?
6 ways to solve this problem:
1) Solve using the Rule of 72
2) Use the interest tables; look for F|P factor equal to 2.0
3) Solve numerically;
4) Sol

Enter an interest rate in the yellow cell to calculate factors
"n" values can be changed as needed
Press <ctrl>F to format small values and large values in scientific notation
8.00%
n
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Topics
Time Value of Money: Simple and Compound Interest
Discounted Cash Flow Rules
Concept of Equivalence Time Value of Money
1. Would you rather receive $1,000 today or $1,000 a year
from today?
2. Would you rather receive $1,000 today or $1,050 a yea

Example 2.10
How long does it take for money to double in value, if you earn 2% annual
compound interest?
6 ways to solve this problem:
1) Solve using the Rule of 72
2) Use the interest tables; look for F|P factor equal to 2.0
3) Solve numerically;
4) Sol

5. Geometric Series cash Flows
A t =A t-1 ( 1 + j)
t = 2,n
or
A t =A1 (1 + j)t-1
t = 1,n
J: is the percent change in the size of a cash flow from one period to the next
A1(1+j)n-1
A1(1+j)n-2
A1(1+j)2
A1(1+j)
A1
0
1
2
3
n-1
n
Note: n-1 not n
Converting Geo