2 - Time Value of Money
Table of Contents
- TIME VALUE OF MONEY
- Simple Interest
- Compound Interest
- Formula for Calculating Compound Interest
- Fun Formulas
- FV Tables
- Annuities
- FV of an Annuity Tables
- Present Value
- Present Value Tables
- The Most Fun Formulas
- PV of an Annuity Tables
- Intrayear Compounding
- Intrayear Compounding (Example)
- Annuities Dues
- Perpetuity
- Perpetuity Example
- Practice
Text and Images from Slide
Intrayear Compounding
- To adjust for intrayear compounding, an interest rate per compounding period must be found as well as the total number of compounding periods
- interest rate per compounding period is found by taking the annual rate and dividing it by the number of times per year the cash flows are compounded
- total number of compounding periods is found by multiplying the number of years by the number of times per year cash flows are compounded