对外经贸公司财务管理课件3 time value

3-1CHAPTER 3Time Value of Money

Future value

Present value

Annuities

Rates of return Amortization

Time lines

3-year $100 ordinary annuity

CF123

$100 after 3 years, if I/YR = 10%?

3-6Solving for FV:The arithmetic method

After 1 year: FV 1= PV ( 1 + i ) = $100 (1.10)= $110.00

After 2 years: FV 2= PV ( 1 + i )2 = $100 (1.10)2=$121.00

After 3 years: FV 3= PV ( 1 + i )3 = $100 (1.10)3=$133.10 After n years (general case):

FV n = PV ( 1 + i )

n

The calculator method

due in 3 years, if I/YR = 10%?

3-9Solving for PV:The arithmetic method Solve the general FV equation for PV: PV = FV n / ( 1 + i )n

PV = FV 3/ ( 1 + i )3= $100 / ( 1.10 )3= $75.13

The calculator method

before sales double?

ordinary annuity and an annuity due?

3-year ordinary annuity of $100 at 10%

3-year ordinary annuity of $100 at 10%

3-year annuity due of $100 at 10%

3 year annuity due of $100 at 10%

cash flow stream?

3-18Solving for PV:Uneven cash flow stream Input cash flows in the calculator’s “CFLO”register:

CF 0= 0

CF 1= 100

CF 2= 300

CF 3= 300 CF 4= -50

Enter I/YR = 10, press NPV button to get NPV = $530.09. (Here NPV = PV.)

grow to $125.97 in 3 years?

3-20The Power of Compound Interest

A 20-year-old student wants to start saving for retirement. She plans to save $3 a day. Every day, she puts $3 in her drawer. At the end of the year, she invests the accumulated savings ($1,095) in an online stock account. The stock account has an expected annual return of 12%.How much money will she have when she is 65 years old?

Savings problem

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