《金融学》答案第四章 货币的时间价值与现金流贴现分析.doc

CHAPTER 4 THE TIME VALUE OF MONEY AND DISCOUNTED CASH FLOW ANALYSIS Objectives To explain the concepts of compounding and discounting, future value and present value. To show how these concepts are applied to making financial decisions. Outline 4.1 Compounding 4.2 The Frequency of Compounding 4.3 Present Value and Discounting 4.4 Alternative Discounted Cash Flow Decision Rules 4.5 Multiple Cash Flows 4.6 Annuities 4.7 Perpetual Annuities 4.8 Loan Amortization 4.9 Exchange Rates and Time Value of Money 4.10 Inflation and Discounted Cash Flow Analysis 4.11 Taxes and Investment Decisions Summary Compounding is the process of going from present value (PV) to future value (FV). The future value of $1 earning interest at rate i per period for n periods is (1+i)n. Discounting is finding the present value of some future amount. The present value of $1 discounted at rate i per period for n periods is 1/(1+i)n. One can make financial decisions by comparing the present values of streams of expected future cash flows resulting from alternative courses of action. The present value of cash inflows less the present value of cash outflows is called net present value (NPV). If a course of action has a positive NPV, it is worth undertaking. In any time value of money calculation, the cash flows and the interest rate must be denominated in the same currency. Never use a nominal interest rate when discounting real cash flows or a real interest rate when discounting nominal cash flows. How to Do TVM Calculations in MS Excel Assume you have the following cash flows set up in a spreadsheet: A B 1 t CF 2 0 -100 3 1 50 4 2 60 5 3 70 6 NPV 7 IRR Move the cursor to cell B6 in the spreadsheet. Click the function wizard fx in the tool bar and when a menu appears, select financial and then NPV. Then follow the instructions for inputting the discount rate and cash flows. You can input the column of cash flows by selecting and moving it with your mouse. Ultimat