Fundamentals of Financial Management (Concise 6th Edition)

140 Part 2 Fundamental Concepts in Financial Management N I/YR PV PMT FV 6 0 –1200 10000 End Mode 6.96 With these smaller deposi ...

Chapter 5 Time Value of Money 141 5-11 PERPETUITIES In the last section, we dealt with annuities whose payments continue for a s ...

142 Part 2 Fundamental Concepts in Financial Management The data to the right of the graph show the value of a $100 annuity whe ...

Chapter 5 Time Value of Money 143 5-12 UNEVEN CASH FLOWS The de! nition of an annuity includes the words constant payment—in oth ...

144 Part 2 Fundamental Concepts in Financial Management quickly and ef! ciently. First, you enter all of the cash " ows and the ...

Chapter 5 Time Value of Money 145 The values of all! nancial assets—stocks, bonds, and business capital invest- ments—are found ...

146 Part 2 Fundamental Concepts in Financial Management Finding the interest rate for an uneven cash " ow stream such as Stream ...

Chapter 5 Time Value of Money 147 conversions are done as follows, where I is the stated annual rate, M is the number of compoun ...

148 Part 2 Fundamental Concepts in Financial Management The same logic applies when we! nd present values under semiannual compo ...

Chapter 5 Time Value of Money 149 the one with quarterly payments because it will get your money sooner. So to compare loans acr ...

150 Part 2 Fundamental Concepts in Financial Management 5-17 FRACTIONAL TIME PERIODS Thus far we have assumed that payments occu ...

Chapter 5 Time Value of Money 151 5-18 AMORTIZED LOANS 14 An important application of compound interest involves loans that are ...

152 Part 2 Fundamental Concepts in Financial Management Therefore, the borrower must pay the lender $23,739.64 per year for the ...

Chapter 5 Time Value of Money 153 h. Uneven cash flow; payment; cash flow (CFt) i. Annual compounding; semiannual compounding j. ...

154 Part 2 Fundamental Concepts in Financial Management To find the present value of an uneven series of cash flows, you must fi ...

Chapter 5 Time Value of Money 155 GROWTH RATES Shalit Corporation’s 2008 sales were $12 million. Its 2003 sales were $6 million. ...

156 Part 2 Fundamental Concepts in Financial Management PV OF A CASH FLOW STREAM A rookie quarterback is negotiating his first N ...

Chapter 5 Time Value of Money 157 EFFECTIVE VERSUS NOMINAL INTEREST RATES Bank A pays 4% interest compounded annually on deposit ...

158 Part 2 Fundamental Concepts in Financial Management than $7,500 per year given your salary. (The loan would call for monthly ...

Chapter 5 Time Value of Money 159 TIME VALUE OF MONEY Answer the following questions: a. Assuming a rate of 10% annually, find t ...