Chapter 3_2010_Allocating Resources Over Time.pptVIP

Objective Explain the concepts of compounding and discounting and to provide examples of real life Applications;Chapter 3 Contents;Financial Decisions;Time Value of Money;Compounding ;Value of Investing $1 at an Interest Rate of 10%;Value of $5 Invested;Value of $5 Invested;Future Value of a Lump Sum;Example: Future Value of a Lump Sum;Calculation by Excel;Example: Reinvesting at a Different Rate;Frequency of Compounding;Effective Annual Rates of an APR of 6%;Frequency of Compounding;Present Value;Present Value of a Lump Sum;Example: Present Value of a Lump Sum;Solving Lump Sum Cash Flo