Time Value of Money 学习课件财务管理英文方案策划.pptVIP

0 1 2 3 10% 0 1 2 3 5% 4 5 6 134.01 100 133.10 1 2 3 0 100 Annually: FV3 = $100(1.10)3 = $133.10. Semiannually: FV6 = $100(1.05)6 = $134.01. We will deal with 3 different rates: iNom = nominal, or stated, or quoted, rate per year. iPer = periodic rate. EAR = EFF% = . effective annual rate iNom is stated in contracts. Periods per year (m) must also be given. Examples: 8%; Quarterly 8%, Daily interest (365 days) Periodic rate = iPer = iNom/m, where m is number of compounding periods per year. m = 4 for quarterly, 12 for monthly, and 360 or 365 for daily compounding. Examples: 8% quarterly: iPer = 8%/4 = 2%. 8% daily (365): iPer = 8%/365 = 0.021918%. Effective Annual Rate (EAR = EFF%): The annual rate which causes PV to grow to the same FV as under multi-period compounding. Example: EFF% for 10%, semiannual: FV = (1 + iNom/m)m = (1.05)2 = 1.1025. EFF% = 10.25% because (1.1025)1 = 1.1025. Any PV would grow to same FV at 10.25% annually or 10% semiannually. An investment with monthly payments is different from one with quarterly payments. Must put on EFF% basis to compare rates of return. Use EFF% only for comparisons. Banks say “interest paid daily.” Same as compounded daily. How do we find EFF% for a nominal rate of 10%, compounded semiannually? Or use a financial calculator. EFF% = - 1 (1 + ) iNom m m = - 1.0 (1 + ) 0.10 2 2 = (1.05)2 - 1.0 = 0.1025 = 10.25%. EAR = EFF% of 10% EARAnnual = 10%. EARQ = (1 + 0.10/4)4 - 1 = 10.38%. EARM = (1 + 0.10/12)12 - 1 = 10.47%. EARD(360) = (1 + 0.10/360)360 - 1 = 10.52%. FV of $100 after 3 years under 10% semiannual compounding? Quarterly? = $100(1.05)6 = $134.01. FV3Q = $100(1.025)12 = $134.49. FV = PV 1 . + i m n Nom mn ? ? ? ? ? ? FV = $100 1 + 0.10 2 3S 2x3 ? ? ? ? ? ? Can the effective rate ever be equal to the nominal r