Chapter 6
Time Value of Money
Simple versus Compound Interest
Simple Interest
Compound Interest
Compound Interest
Compound Interest
Valuing a Single Cash Flow Amount
Future Value of a Single Amount
Present Value of a Single Amount
Present Value of a Single Amount
Relation between the Present Value and the Future Value
Solving for Other Values When FV and PV Are Known
Determining an Unknown Interest Rate (continued)
Solving for Other Values When FV and PV Are Known
Determining an Unknown Number of Periods (continued)
Slide 17
Valuing a Note: One Payment, Explicit Interest
Valuing a Note: One Payment, Explicit Interest
Valuing a Note: One Payment, No Interest Stated
Valuing a Note: One Payment, No Explicit Interest
Expected Cash Flow Approach
Illustration: Expected Cash Flow Approach
Basic Annuities
Ordinary Annuity
Annuity Due
Future Value of an Ordinary Annuity
Using the FVA Table to Calculate the Future Value
Future Value of an Annuity Due
Present Value of an Ordinary Annuity
Using the PVA Table to Calculate the Present Value
Present Value of an Annuity Due
Using the PVAD Table to Calculate the Present Value
Present Value of a Deferred Annuity
Present Value of a Deferred Annuity (continued)
Slide 36
Slide 37
Financial Calculators
Excel
Solving for Unknown Values in Present Value Situations
Slide 41
Slide 42
Slide 43
Valuing a Long-Term Bond Liability
Valuing a Long-Term Lease Liability
Valuing a Pension Obligation
Summary of Time Value of Money Concepts
End of Chapter 6