《财务管理基础 沈洪涛》ch06.pptVIP

CHAPTER 6Time Value of Money Future value Present value Annuities Rates of return Amortization Time lines Show the timing of cash flows. Tick marks occur at the end of periods, so Time 0 is today; Time 1 is the end of the first period (year, month, etc.) or the beginning of the second period. Drawing time lines:$100 lump sum due in 2 years;3-year $100 ordinary annuity Drawing time lines:Uneven cash flow stream; CF0 = -$50, CF1 = $100, CF2 = $75, and CF3 = $50 What is the future value (FV) of an initial $100 after 3 years, if I/YR = 10%? Finding the FV of a cash flow or series of cash flows when compound interest is applied is called compounding. FV can be solved by using the arithmetic, financial calculator, and spreadsheet methods. Solving for FV:The arithmetic method After 1 year: FV1 = PV ( 1 + i ) = $100 (1.10) = $110.00 After 2 years: FV2 = PV ( 1 + i )2 = $100 (1.10)2 =$121.00 After 3 years: FV3 = PV ( 1 + i )3 = $100 (1.10)3 =$133.10 After n years (general case): FVn = PV ( 1 + i )n Solving for FV:The calculator method Solves the general FV equation. Requires 4 inputs into calculator, and will solve for the fifth. (Set to P/YR = 1 and END mode.) What is the present value (PV) of $100 due in 3 years, if I/YR = 10%? Finding the PV of a cash flow or series of cash flows when compound interest is applied is called discounting (the reverse of compounding). The PV shows the value of cash flows in terms of today’s purchasing power. Solving for PV:The arithmetic method Solve the general FV equation for PV: PV = FVn / ( 1 + i )n PV = FV3 / ( 1 + i )3 = $100 / ( 1.10 )3 = $75.13 Solving for PV:The calculator method Solves the general FV equation for PV. Exactly like solving for FV, except we have different input information and are solving for a different variable. Solving for N:If sales grow at 20% per year, how long before sales double? Solves the general FV equation for N. Same as previous problems, but now solving for N. W