BU111 Lecture 12: BU 111 Lecture 12 - Economic Factors Continued
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Forced to cover short at disadvantageous price. Dividends may be declared that you must cover. Broker adds the money to your account = increases deposit. Concept important to leases, mortgages, bonds, retirement contributions, stock valuation, project selection. What will you have in one year if you deposit into an account today that earns. 4% interest compounded annually? r=. 04 (interest or discount rate) Pv= (single amount that is known today) n= 1 (number of payment periods) How much do you have to deposit today to have after one year (assuming 4% interest compounded annually?) Or what is the present value of to be received in one year (assume a 4% discount rate). How much do you have to deposit today to have after three years (assuming. Or what is the present value of to be received in three years (assume a 4% discount rate) Fv = . 16 + + = . 16.
