- The document discusses different cash flow patterns including single amounts, annuities, and mixed streams.
- It then provides examples of calculating future values of cash flows using compound interest formulas, including deposits into money market accounts and evaluating annuity streams.
- The key considerations are determining the present and future values, interest rates, and time periods in order to select the more attractive cash flow option.
General 2 HSC Credit and Borrowing - Future ValueSimon Borgert
This document provides three examples of calculating future and present values of investments using compound interest formulas. The first two examples show calculating the future value after 7 years of an initial $4000 investment at 5.5% annual interest, with the second example compounding interest monthly rather than annually, resulting in a higher future value. The third example calculates the present value of an annuity worth $11,375 in 5 years at 6% interest per year.
Here are the steps to solve this problem:
FV = PV(1 + r/n)nt
FV = $4,000(1 + 0.09)11
FV = $4,000(2.1435)
FV = $8,574
The future value of $4,000 invested for 11 years at 9% compounded annually is $8,574.
American households and individuals carry substantial credit card and other debt. In 2008, the average credit card debt per household was $8,329. Total US credit card debt in 2008 was $972.73 billion. Nearly 15% of US families had debt exceeding 40% of their income in 2007. College graduates have an average of $20,000 in student loan debt. Credit card debt has risen substantially for young Americans aged 18-24 and 25-34 since 1989. Nearly 1 in 5 young Americans aged 18-24 are in debt hardship. The summary provides key statistics on American credit card and other debt levels.
The document provides practice questions and tips for business mathematics exams. It includes 20 sample questions covering topics like ratios, percentages, time/work problems, profit/loss, and series sums. The questions are multiple choice with explanations provided for the answers.
This document provides an overview of fundamental arithmetic operations including fractions, ratios, proportions, and percentages. It defines key terms such as numerator, denominator, proper/improper fractions, equivalent fractions, and operations involving addition, subtraction, multiplication, division, and powers of fractions. It also defines ratios and proportions, including using cross multiplication to solve proportion problems. Finally, it discusses percentages and how to convert between fractions, decimals, and percentages by moving the decimal point.
(1) This document provides solutions to problems related to time value of money concepts such as future value, present value, and compound interest calculations.
(2) It includes examples of using the future value formula to calculate future values over different time periods and interest rates. It also shows how to use future value tables to solve for unknown time periods.
(3) Several problems demonstrate using the present value formula to calculate present values of future lump sums, and how higher discount rates result in lower present values. Comparisons are made between investment alternatives based on their present values.
(1) This document contains solutions to problems related to time value of money concepts such as compounding, discounting, future value, present value, and annuities.
(2) Financial managers rely more on present value than future value because they typically make decisions at time zero, as does the present value calculation.
(3) As the discount rate increases or the time until receipt of a future payment increases, the present value of that payment decreases. Higher discount rates or longer times reflect higher opportunity costs.
- The document discusses different cash flow patterns including single amounts, annuities, and mixed streams.
- It then provides examples of calculating future values of cash flows using compound interest formulas, including deposits into money market accounts and evaluating annuity streams.
- The key considerations are determining the present and future values, interest rates, and time periods in order to select the more attractive cash flow option.
General 2 HSC Credit and Borrowing - Future ValueSimon Borgert
This document provides three examples of calculating future and present values of investments using compound interest formulas. The first two examples show calculating the future value after 7 years of an initial $4000 investment at 5.5% annual interest, with the second example compounding interest monthly rather than annually, resulting in a higher future value. The third example calculates the present value of an annuity worth $11,375 in 5 years at 6% interest per year.
Here are the steps to solve this problem:
FV = PV(1 + r/n)nt
FV = $4,000(1 + 0.09)11
FV = $4,000(2.1435)
FV = $8,574
The future value of $4,000 invested for 11 years at 9% compounded annually is $8,574.
American households and individuals carry substantial credit card and other debt. In 2008, the average credit card debt per household was $8,329. Total US credit card debt in 2008 was $972.73 billion. Nearly 15% of US families had debt exceeding 40% of their income in 2007. College graduates have an average of $20,000 in student loan debt. Credit card debt has risen substantially for young Americans aged 18-24 and 25-34 since 1989. Nearly 1 in 5 young Americans aged 18-24 are in debt hardship. The summary provides key statistics on American credit card and other debt levels.
The document provides practice questions and tips for business mathematics exams. It includes 20 sample questions covering topics like ratios, percentages, time/work problems, profit/loss, and series sums. The questions are multiple choice with explanations provided for the answers.
This document provides an overview of fundamental arithmetic operations including fractions, ratios, proportions, and percentages. It defines key terms such as numerator, denominator, proper/improper fractions, equivalent fractions, and operations involving addition, subtraction, multiplication, division, and powers of fractions. It also defines ratios and proportions, including using cross multiplication to solve proportion problems. Finally, it discusses percentages and how to convert between fractions, decimals, and percentages by moving the decimal point.
(1) This document provides solutions to problems related to time value of money concepts such as future value, present value, and compound interest calculations.
(2) It includes examples of using the future value formula to calculate future values over different time periods and interest rates. It also shows how to use future value tables to solve for unknown time periods.
(3) Several problems demonstrate using the present value formula to calculate present values of future lump sums, and how higher discount rates result in lower present values. Comparisons are made between investment alternatives based on their present values.
(1) This document contains solutions to problems related to time value of money concepts such as compounding, discounting, future value, present value, and annuities.
(2) Financial managers rely more on present value than future value because they typically make decisions at time zero, as does the present value calculation.
(3) As the discount rate increases or the time until receipt of a future payment increases, the present value of that payment decreases. Higher discount rates or longer times reflect higher opportunity costs.
This document contains class notes that review fundamentals of valuation, including time value of money concepts like future value, present value, and rates of return. It provides examples of calculating single sums, future values, present values, and rates of return using formulas. It also discusses compounding periods and continuous compounding. The notes conclude with practice problems for calculating present and future values of single sums.
Compounding More than Once a Year week2.pptxRYANCENRIQUEZ
This document provides examples and explanations for computing compound interest when it is compounded more than once per year. It defines key terms like nominal interest rate, frequency of conversion, and interest rate per conversion period. Examples are provided to demonstrate calculating maturity value, interest, and present value for principal amounts compounded quarterly, semi-annually, and monthly over various time periods. Practice problems at the end involve using the concepts and formulas taught to solve for unknown values in compound interest scenarios.
CFA LEVEL 1- Time Value of Money_compressed (1).pdfAlison Tutors
This document focuses on End of Chapter questions and commonly asked questions under Quantitative methods (Time Value of Money ) . The mainly asked questions include :
-calculation and interpretation of Future Value and Present Value of a single sum of money , an ordinary annuity, annuity due, a perpetuity (PV only) and a series of unequal cash flows.
-demonstration of the use of timelines in modeling and solving time value of money
This is a very interesting topic!
Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods of a deposit or loan. There are formulas to calculate the maturity value, compound interest, and present value of investments compounded annually or more frequently. When interest is compounded more than once per year, the nominal interest rate is divided by the number of compounding periods per year to determine the periodic interest rate used in the compound interest formula. Several examples are provided to demonstrate calculating compound interest, maturity values, and present values for investments compounded annually and semi-annually.
Here are the solutions:
1a) Simple Interest = Principal x Rate x Time
= P 60,000 x 8% x 1
= P 60,000 x 0.08
= P 4,800
1b) Compounded annually:
Interest = Principal x (1 + Rate)^Time - Principal
= P 60,000 x (1 + 0.08)^1 - P 60,000
= P 60,000 x 1.08 - P 60,000
= P 4,800
1c) Compounded semi-annually:
Rate per period = Annual rate / Times compounded per year = 8% / 2 = 4%
Interest = Principal x (1 +
This document provides an overview of time value of money concepts including simple and compound interest, future and present value, and annuities. Key points covered include:
- Compound interest earns interest on previous interest amounts as well as the principal, resulting in higher total returns over time compared to simple interest.
- Future value and present value formulas allow calculating the value of a single deposit or withdrawal at a future or present point in time using a given interest rate.
- Annuities represent a series of equal periodic cash flows, and formulas are provided to calculate the future and present value of ordinary annuities and annuities due.
The document discusses compound interest and how to calculate maturity value, interest, and present value when interest is compounded more than once per year. It provides examples of how to calculate these values when interest is compounded annually, semi-annually, quarterly, and monthly. The key formulas introduced are the maturity value formula which includes the frequency of compounding, and the present value formula which discounts the future value back based on the compounding frequency.
This document provides an overview of chapter 3 which covers the time value of money. It discusses key concepts like simple and compound interest, present and future value, and annuities. The learning objectives are to understand how interest rates can be used to adjust the value of cash flows over time and calculate future and present values for various cash flow scenarios. Formulas, examples, and the use of interest tables and calculators are presented.
The document discusses the time value of money and compound interest. It explains key concepts like simple vs compound interest, present and future value, and ordinary annuities. Examples are provided to demonstrate how to calculate future and present value of single deposits and annuities using formulas, tables and calculators. The reader will learn how interest allows money to grow over time and the importance of compounding interest.
This document discusses the time value of money concepts of interest, present value, and future value. It provides examples of calculating simple and compound interest, as well as the present and future value of single deposits and annuities. Formulas for simple and compound interest, present value, future value, ordinary annuities, and annuities due are presented along with examples of applying the concepts and formulas to story problems. Tables of interest rate factors are also included to allow for lookup of present and future values.
- Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.
- Discounting is the process of determining the present value of future cash flows.
- The document provides examples of using formulas to calculate future and present values under different interest rates and time periods, demonstrating the impact of compounding.
The document provides an overview of key concepts related to the time value of money, including compound and simple interest, present and future value calculations, and annuities. It outlines learning objectives, defines key terms, shows examples of calculations, and provides guidance on using formulas and tables to solve time value of money problems for single deposits, annuities, and other scenarios.
Investment Multiplier and Super multiplierKhemraj Subedi
Investment Multiplier and Super Multiplier are very important concept of Macroeconomics to understand the effect of autonomous investment and induced investment in final increase in national income.
BUSINESS FINANCE (SIMPLE AND COMPOUND INTEREST.pptxKarenKateRSibayan
The document discusses basic long-term financial concepts like simple and compound interest. It provides examples to illustrate the difference between simple and compound interest, including calculating interest earned on investments over time. The story of the three servants is used to show how compound interest can generate higher returns than simple interest over many years. The moral lesson is that investing money and allowing interest to compound can significantly increase returns compared to just keeping money without investing.
Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods of time. More frequent compounding results in higher total interest earned over time. For example, compounding interest semi-annually instead of annually means interest is earned twice as often, leading to greater overall growth of the principal amount. The document provides examples of compound interest calculations using common formulas and variables like principal, interest rate, time period, and future/maturity value.
Compound interest is interest calculated on the initial principal amount and also on the accumulated interest from previous periods. It is computed every conversion period, with the principal amount increasing each period to include interest earned. The total amount accumulated at the end of the term is called the compound amount. Common terms include the compound interest, nominal interest rate, periodic interest rate, and conversion periods such as monthly, quarterly, or annually. Formulas can be used to calculate the future value, present value, interest rate, and time or term based on given amounts, rates, and periods of compound interest. Sample problems demonstrated the use of these formulas to solve various compound interest scenarios.
This document discusses the time value of money and compound interest. It begins by explaining key concepts like present value, future value, and compound interest formulas. Examples are provided to demonstrate how to calculate future and present value for single deposits and using interest tables. The document also covers annuities, different types of interest (simple vs. compound), and using a financial calculator to solve time value of money problems. The goal is to understand how to adjust cash flows over time using interest rates.
The Keynesian multiplier process describes how an initial autonomous change in spending has a multiplied impact on total income and spending in the economy through successive rounds of induced spending. When people receive more income from the initial spending injection, they in turn spend a portion of that additional income, which becomes someone else's income and so on. However, at each stage some spending leaks out through savings, taxes and imports. The multiplier effect ends when total induced leakages have offset the original autonomous spending change. The size of the multiplier depends on factors like the marginal propensity to consume.
This document contains solutions to problems related to time value of money concepts. Problem 4-1 provides the solution to using a timeline to analyze financial decisions. Problems 4-2 through 4-4 involve calculations of future value using the future value formula and tables. Problems 4-5 through 4-9 apply time value concepts to personal finance scenarios involving compound interest calculations. Problems 4-10 through 4-12 deal with present value calculations and conversions between future and present value. Problems 4-13 through 4-17 continue applying these time value of money principles to additional personal finance examples.
MANAJEMEN KEUANGAN tugas mahasiswa akuntansi FAKULTAS EKONOMI DAN BISNIS fanjistie
The document discusses the role of return analysis and risk in investment. It provides formulas to calculate expected return, actual return, variance, standard deviation and coefficient of variation to measure risk. It also discusses portfolio risk reduction through diversification and the concept of Value at Risk to estimate maximum potential portfolio losses. The document presents examples and explanations of calculations related to return, risk and risk management of individual securities and portfolios.
Simulation of Natural Gas leak detection system using AIEdgar Carrillo
This powerpoint presentation talks about natural gas leak detection system using AI. The AI involve here includes fuzzy logic, genetic algorithm and neural networks
This document contains class notes that review fundamentals of valuation, including time value of money concepts like future value, present value, and rates of return. It provides examples of calculating single sums, future values, present values, and rates of return using formulas. It also discusses compounding periods and continuous compounding. The notes conclude with practice problems for calculating present and future values of single sums.
Compounding More than Once a Year week2.pptxRYANCENRIQUEZ
This document provides examples and explanations for computing compound interest when it is compounded more than once per year. It defines key terms like nominal interest rate, frequency of conversion, and interest rate per conversion period. Examples are provided to demonstrate calculating maturity value, interest, and present value for principal amounts compounded quarterly, semi-annually, and monthly over various time periods. Practice problems at the end involve using the concepts and formulas taught to solve for unknown values in compound interest scenarios.
CFA LEVEL 1- Time Value of Money_compressed (1).pdfAlison Tutors
This document focuses on End of Chapter questions and commonly asked questions under Quantitative methods (Time Value of Money ) . The mainly asked questions include :
-calculation and interpretation of Future Value and Present Value of a single sum of money , an ordinary annuity, annuity due, a perpetuity (PV only) and a series of unequal cash flows.
-demonstration of the use of timelines in modeling and solving time value of money
This is a very interesting topic!
Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods of a deposit or loan. There are formulas to calculate the maturity value, compound interest, and present value of investments compounded annually or more frequently. When interest is compounded more than once per year, the nominal interest rate is divided by the number of compounding periods per year to determine the periodic interest rate used in the compound interest formula. Several examples are provided to demonstrate calculating compound interest, maturity values, and present values for investments compounded annually and semi-annually.
Here are the solutions:
1a) Simple Interest = Principal x Rate x Time
= P 60,000 x 8% x 1
= P 60,000 x 0.08
= P 4,800
1b) Compounded annually:
Interest = Principal x (1 + Rate)^Time - Principal
= P 60,000 x (1 + 0.08)^1 - P 60,000
= P 60,000 x 1.08 - P 60,000
= P 4,800
1c) Compounded semi-annually:
Rate per period = Annual rate / Times compounded per year = 8% / 2 = 4%
Interest = Principal x (1 +
This document provides an overview of time value of money concepts including simple and compound interest, future and present value, and annuities. Key points covered include:
- Compound interest earns interest on previous interest amounts as well as the principal, resulting in higher total returns over time compared to simple interest.
- Future value and present value formulas allow calculating the value of a single deposit or withdrawal at a future or present point in time using a given interest rate.
- Annuities represent a series of equal periodic cash flows, and formulas are provided to calculate the future and present value of ordinary annuities and annuities due.
The document discusses compound interest and how to calculate maturity value, interest, and present value when interest is compounded more than once per year. It provides examples of how to calculate these values when interest is compounded annually, semi-annually, quarterly, and monthly. The key formulas introduced are the maturity value formula which includes the frequency of compounding, and the present value formula which discounts the future value back based on the compounding frequency.
This document provides an overview of chapter 3 which covers the time value of money. It discusses key concepts like simple and compound interest, present and future value, and annuities. The learning objectives are to understand how interest rates can be used to adjust the value of cash flows over time and calculate future and present values for various cash flow scenarios. Formulas, examples, and the use of interest tables and calculators are presented.
The document discusses the time value of money and compound interest. It explains key concepts like simple vs compound interest, present and future value, and ordinary annuities. Examples are provided to demonstrate how to calculate future and present value of single deposits and annuities using formulas, tables and calculators. The reader will learn how interest allows money to grow over time and the importance of compounding interest.
This document discusses the time value of money concepts of interest, present value, and future value. It provides examples of calculating simple and compound interest, as well as the present and future value of single deposits and annuities. Formulas for simple and compound interest, present value, future value, ordinary annuities, and annuities due are presented along with examples of applying the concepts and formulas to story problems. Tables of interest rate factors are also included to allow for lookup of present and future values.
- Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.
- Discounting is the process of determining the present value of future cash flows.
- The document provides examples of using formulas to calculate future and present values under different interest rates and time periods, demonstrating the impact of compounding.
The document provides an overview of key concepts related to the time value of money, including compound and simple interest, present and future value calculations, and annuities. It outlines learning objectives, defines key terms, shows examples of calculations, and provides guidance on using formulas and tables to solve time value of money problems for single deposits, annuities, and other scenarios.
Investment Multiplier and Super multiplierKhemraj Subedi
Investment Multiplier and Super Multiplier are very important concept of Macroeconomics to understand the effect of autonomous investment and induced investment in final increase in national income.
BUSINESS FINANCE (SIMPLE AND COMPOUND INTEREST.pptxKarenKateRSibayan
The document discusses basic long-term financial concepts like simple and compound interest. It provides examples to illustrate the difference between simple and compound interest, including calculating interest earned on investments over time. The story of the three servants is used to show how compound interest can generate higher returns than simple interest over many years. The moral lesson is that investing money and allowing interest to compound can significantly increase returns compared to just keeping money without investing.
Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods of time. More frequent compounding results in higher total interest earned over time. For example, compounding interest semi-annually instead of annually means interest is earned twice as often, leading to greater overall growth of the principal amount. The document provides examples of compound interest calculations using common formulas and variables like principal, interest rate, time period, and future/maturity value.
Compound interest is interest calculated on the initial principal amount and also on the accumulated interest from previous periods. It is computed every conversion period, with the principal amount increasing each period to include interest earned. The total amount accumulated at the end of the term is called the compound amount. Common terms include the compound interest, nominal interest rate, periodic interest rate, and conversion periods such as monthly, quarterly, or annually. Formulas can be used to calculate the future value, present value, interest rate, and time or term based on given amounts, rates, and periods of compound interest. Sample problems demonstrated the use of these formulas to solve various compound interest scenarios.
This document discusses the time value of money and compound interest. It begins by explaining key concepts like present value, future value, and compound interest formulas. Examples are provided to demonstrate how to calculate future and present value for single deposits and using interest tables. The document also covers annuities, different types of interest (simple vs. compound), and using a financial calculator to solve time value of money problems. The goal is to understand how to adjust cash flows over time using interest rates.
The Keynesian multiplier process describes how an initial autonomous change in spending has a multiplied impact on total income and spending in the economy through successive rounds of induced spending. When people receive more income from the initial spending injection, they in turn spend a portion of that additional income, which becomes someone else's income and so on. However, at each stage some spending leaks out through savings, taxes and imports. The multiplier effect ends when total induced leakages have offset the original autonomous spending change. The size of the multiplier depends on factors like the marginal propensity to consume.
This document contains solutions to problems related to time value of money concepts. Problem 4-1 provides the solution to using a timeline to analyze financial decisions. Problems 4-2 through 4-4 involve calculations of future value using the future value formula and tables. Problems 4-5 through 4-9 apply time value concepts to personal finance scenarios involving compound interest calculations. Problems 4-10 through 4-12 deal with present value calculations and conversions between future and present value. Problems 4-13 through 4-17 continue applying these time value of money principles to additional personal finance examples.
MANAJEMEN KEUANGAN tugas mahasiswa akuntansi FAKULTAS EKONOMI DAN BISNIS fanjistie
The document discusses the role of return analysis and risk in investment. It provides formulas to calculate expected return, actual return, variance, standard deviation and coefficient of variation to measure risk. It also discusses portfolio risk reduction through diversification and the concept of Value at Risk to estimate maximum potential portfolio losses. The document presents examples and explanations of calculations related to return, risk and risk management of individual securities and portfolios.
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A workshop hosted by the South African Journal of Science aimed at postgraduate students and early career researchers with little or no experience in writing and publishing journal articles.
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it describes the bony anatomy including the femoral head , acetabulum, labrum . also discusses the capsule , ligaments . muscle that act on the hip joint and the range of motion are outlined. factors affecting hip joint stability and weight transmission through the joint are summarized.
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1. The Math of
Financial Literacy
By: Engr. Edgar Caburatan Carrillo II, ChE
Master of Science in Mechanical Engineering
De La Salle University Manila, Philippines
2. Flow of Discussion
1.Brief Introduction
2. Three wealth creation strategy
3. Comparison and Analysis of Strategies
4. Conclusion
5. 3 Wealth Creation Strategy
1. Simple Interest
2. Compound Interest
3. EC Wealth Model
(1 )
FV PV i
Y
FV n
FV
FV FV i Y
n n s
365
Y D x
12
(1 )
1
1
1
s s
Y s S m
x
s
9. EC Wealth Model
P= Php 50,000 Ds= P 3.33/day
I=10% Sm= 33.33x 30=1000
n=40 years Ys= 1000*12= 12,000
FV1= P(1+i)+ Ys
FV1= 50,000(1+.1)+12,000= 67,000
FV2= 67,000(1.1)+12,000=87,000
Fvn= P 7.57 M
Dividend: 757,407.30/year
Monthly: 63,117.28/month
10. Analysis of Wealth Creation model
Inflation: Food= 50*3=150/day*30= 4,500
Cost of Food each month in 2014= Php 4,500
Cost of Food each month after 40 years:
FV=PV(1+i)^n= 4,500(1+.05)^40= 31,679.95
1. Simple Interest
Php= 416.67 (You will not survive)
2. Compound Interest
Php= 18,858.02(You will not survive)
3. EC Wealth Model
Php= 63,117.28(You will survive)
11. Conclusion
The three wealth Creation model can grow your wealth but among
the three, EC Wealth Model was proven to be the most efficient
way producing massive wealth.
The EC Wealth Model can only be implemented if Disciple,
hardwork and consistent monthly savings will be done. This is to
secure your retirement, securing your future and the future of your
children's children.