Principles of Managerial Finance

140 PART 1 Introduction to Managerial Finance (8) Accounts receivable, accounts payable, and other current liabilities will chan ...

CHAPTER 3 Cash Flow and Financial Planning 141 WW W Remember to check the book’s Web site at http://www.aw.com/gitman for additi ...

142 INTEGRATIVE CASE 1 Track Software, Inc. Track Software, Inc. Profit, Dividends, and Retained Earnings, 1997–2003 Contributio ...

143 Table 2 Track Software, Inc. Income Statement ($000) for the Year Ended December 31, 2003 Sales revenue $1,550 Less: Cost of ...

144 Track Software, Inc. Balance Sheets ($000) December 31 Assets 2003 2002 Current assets Cash $ 12 $ 31 Marketable securities ...

145 Track Software, Inc. Statement of Retained Earnings ($000) for the Year Ended December 31, 2003 Retained earnings balance (J ...

146 Stanley is further frustrated by the firm’s inability to afford to hire a software developer to complete development of a co ...

147147 PART 2 IMPORTANT FINANCIAL CONCEPTS CHAPTERS IN THIS PART 4 Time Value of Money 5 Risk and Return 6 Interest Rates and Bo ...

LEARNING GOALS 148 TIME VALUE OF MONEY CHAPTER Across the Disciplines WHY THIS CHAPTER MATTERS TO YOU Accounting:You need to und ...

149 H ow do managers decide which cus- tomers offer the highest profit poten- tial? Should marketing programs focus on new custo ...

150 PART 2 Important Financial Concepts time line A horizontal line on which time zero appears at the leftmost end and future pe ...

CHAPTER 4 Time Value of Money 151 $10,000 $3,000 $5,000 $4,000 $3,000 $2,000 0123 Compounding Discounting 45 Future Value Pres ...

152 PART 2 Important Financial Concepts 1% 1 Period Interest Rate 2 3 10 20 50 2% 10% 20% X.XXX 50% N — Number of periods I — In ...

CHAPTER 4 Time Value of Money 153 Hint Anyone familiar with electronic spreadsheets, such as Lotus or Excel, realizes that most ...

154 PART 2 Important Financial Concepts immediate response to one’s entries. The interplay between computer and user becomes a g ...

CHAPTER 4 Time Value of Money 155 compound interest Interest that is earned on a given deposit and has become part of the princi ...

Time line for future value of a single amount ($800 initial principal, earning 6%, at the end of 5 years) 156 PART 2 Important F ...

CHAPTER 4 Time Value of Money 157 Although we commonly deal with years rather than periods, financial tables are frequently pre ...

158 PART 2 Important Financial Concepts 30.00 25.00 20.00 15.00 10.00 5.00 1.00 0 2 4 6 8 10 12 14 16 18 20 22 24 Periods Future ...

CHAPTER 4 Time Value of Money 159 present value The current dollar value of a future amount—the amount of money that would have ...