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2Time Value of Money

2Time Value of Money

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Published by Sagar Khairnar

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Published by: Sagar Khairnar on Jun 18, 2012
Copyright:Attribution Non-commercial

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11/04/2013

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1
Time Value of Money
All time lines were drawn and discussed in classRemoval of errors and omissions, if any, in thisppt are your responsibility
 
2
Agenda
TimelinePresent Value - Future ValueOne period PV, NPVPV - different rates and time periodsFV - different rates and time periodsMulti-Period Case (incl. power of compounding)Annuities, Perpetuities - SimplificationsSpecial CasesEffective Annual RateAPR and Loan BalanceRisk and CF
 
3
Timeline
Main issue is what value to place on a cash flow
When or
time
component (early part of thecourse)
Uncertainty
(risk-return latter part)
Importance is because we need to makeapples-to-apples comparisonsIt is only possible to compare or combinevalues at the same point in time

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