T5.1ChapterOutline-GeorgiaStateUniversity.pptVIP

Introduction to Valuation: The Time Value of Money And Discounted Cash Flow Valuation Future Value and Compounding Present Value and Discounting More on Present and Future Values Summary and Conclusions of the Time Value of Money  T3 Future Value for a Lump Sum Notice that 1. $110 = $100 (1 + .10) 2. $121 = $110 (1 + .10) = $100 1.1 1.1 = $100 1.12 3. $133.10 = $121 (1 + .10) = $100 1.1 1.1 1.1 = $100 ________ In general, the future value, FVt, of $1 invested today at r% for t periods is FVt = $1 x (1 + r)t The expression (1 + r)t is the future val