BBG 101 Lecture Notes - Lecture 6: Balance Sheet, Interest, Flat Rate

• School: Tunxis Community College
• Department: Business – General
• Course: BBG 101
• Professor: Boccaccio

Document Summary

Real or productive assets: produce the cash flows over time. Financial or paper assets: claims on cash flows of productive assets. The financial manager makes decisions about proposals with cash flows over long periods of time. An important decision is the timing of these cash flows: the time value of money must be recognised. It is based on the fact that a dollar today is worth more than a dollar tomorrow: would you prefer m today or m in 5 years time. A dollar amount today: present value. Gives a dollar amount in the future: future value. This week, we learn about applications that require three variables to then determine a fourth. Used in the valuation of short-term financial instruments traded in the money market. I = simple interest rates per year. Fv = future value at the end of term. Int = interest amount over the time period. Fv = pv + pv x i x n.