You will receive an inheritance of $500,000 in 20 years on your 40 th birthday. What is the
value of the inheritance today if the discount rate is 10%?
R
10%
T
20
CF
$500,000.00
PV - Formula
$ 74,321.81
PV - Excel
$ 74,321.81
Accept your brother's offer?Y
1. Paradise, Inc., has identified an investment project with the following cash flows.
Year
1
2
3
4
Cash Flow
$625
950
1,125
1,400
Required:
(a
If the discount rate is 10 percent, what is the future value of these cash flows in year 4?
)
(b
What is the fu
You will receive an inheritance of $500,000 in 20 years on your 40 th birthday. What is the
value of the inheritance today if the discount rate is 10%?
R
10%
T
20
CF
$500,000.00
PV - Formula
$ 74,321.81
PV - Excel
$ 74,321.81
Accept your brother's offer?Y
Corporate Finance ECON36500
Hunter College
Prof. Lu
Assignment 1
(Due on Sep.10th)
1. In January 2007, the average price of an asset was $27,658. 7 years earlier, the average
price was $21,408. What was the annual increase in selling price?
2. You're tryi
1. Staind, Inc., has 7 percent coupon bonds on the market that have 7 years left to maturity. The
bonds make annual payments. If the YTM on these bonds is 11 percent, what is the current bond
price?
2. Kiss the Sky Enterprises has bonds on the market maki
RJR Nabisco
Some genius invented the Oreo. Were just living
off of the inheritance.
F. Ross Johnson
Fair Market Value
Fair Market Value: the price at which the
asset would trade between two rational
individuals, each in command of all of the
information
Lecture 2 Accounting for Corporate Finance: Financial Statements, Taxes, and Cash Flow (Ch.2)
McGraw-Hill/Irwin
Lecturer Outline
The Balance Sheet The Income Statement Taxes Cash Flow
2-2
Balance Sheet
The balance sheet is a snapshot of the firms assets
Lecture 1 Introduction to Corporate Finance (Ch.1)
McGraw-Hill/Irwin
Outline
Corporate Finance and the Financial Manager The Goal of Financial Management Forms of Business Organization The Agency Problem and Control of the Corporation Financial Markets i
Lecture 10 Interest Rate and Bond Valuation
Chapter 7 (omit 7.7)
Eco 365.02 Prof. Zhylenko
1
Learning Objectives
Know the important bond features and bond types Understand bond values and why they fluctuate Understand bond ratings and what they mean Unde
Eco 635.02 Prof. Zhylenko
Lecture 9: Discounted Cash Valuation III
1
Eco 635.02 Prof. Zhylenko
Finding the Number of Payments
Suppose you borrow $2,000 at 5%, and you are going to make annual payments of $734.42. How long before you pay off the loan?
2,0
Eco 635.02 Prof. Zhylenko
Annuities and Perpetuities
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 beginn
Eco 635.02
Quick Quiz
Define present value, future value, and interest rate. You know the payment amount for a loan, and you want to know how much was borrowed. Do you compute a PV or a FV? What is the difference between simple interest and compound inte
Eco 635.02 Prof. Zhylenko
Lecture 7 Discounted Cash Flow Valuation
1
Eco 635.02 Prof. Zhylenko
Multiple Cash Flows - FV
Ways to calculate future values for multiple cash flows: 1. Compound the accumulated balance forward one year at a time 2. Calculate th
Eco635.02 Prof.Zhylenko
Lecture5 IntroductiontoValuation: TheTimeValueofMoney
Introduction to Valuation: The Time Value of Money
1
Eco635.02 Prof.Zhylenko
BasicDefinitions
PresentValueearliermoneyonatimeline FutureValuelatermoneyonatimeline Interestratee
L ecturer 3 Accounting for Corporate Finance: W orking With Financial Statements (Ch.3)
McGraw-Hill/Irwin
Sources and Uses of Cash
Sources Cash inflow activities that generate cash Uses Cash outflow activities that involve spending cash
3-2
Sample Balanc