Q9fromtextbook
A project that provides annual cash flows of
$14,000 for nine years costs $70,000.
Is this a good project if the required return is 8%?
At which required return would we be indifferent
between accepting or rejecting the project?
Chapter12
C

Chapter5
Time Value of Money
1
LearningObjectives
Compute the return on an investment
Compute the number of periods that equates
a present value and a future value given an
interest rate
Compute FV or PV of multiple cash flows
2
LumpSumPVFormula:Example
Y

MortgageExample1
You have just applied for a $120,000 mortgage. The
quoted rate is 6% and you have chosen to amortize
over 15 years. What will be your monthly payment?
Your
banker suggests that you amortize over 30
years. What would be your monthly paymen

Chapter6
Discounted Cash Flow Valuation
1
LearningObjectives
Value annuities and perpetuities
Compute loan payments
Find the interest rate on a loan
Describe how loans are amortized (paid off)
Convert between quoted and effective
interest rates
2
Examplet

Chapter13
Risk & Return
1
LearningObjectives
Calculate expected returns and variance of
returns for individual securities and for
portfolios of securities
List the effects of diversification
Define correlation
Define systematic risk
Calculate required ret

ExampletoDoForNextClass:
Returnfromstockinvestment
Cow Corp. is forecast to pay a $4 dividend every quarter
over the next year. You just bought 100 shares for $100
per share. If you can sell for $102.85 per share one year
from now, right after receiving y

BUSI 2504 Lecture 2
Continue of Chapter 5: Time Value of Money
Declining Sales: Example
FV
= PV (1 + r)t
= 2,000 (1 + (-0.1)4
= 2,000 (0.9)4
= 1,312 cars
2,000 1,312 = 688 cars less
Present Value: Example
Bob has a vintage typewriter that he would like to

Chapter 1
3 types of business ownership
- Sole proprietorship
- Partnership
o General
o Limited
- Corporation
Advantages
Sole Proprietorship
- Easiest to start
- Least regulated
- Single owner keeps
all profits
- Taxed once as
personal income
Partnership