BFF2140 Lecture 2: BFF2140 – Week 2 Lecture Financial Maths
Document Summary
Evaluate mixed stream or multiple cash flow patterns. The approach to calculating the future value of a known mixed stream involves a two step process and requires value additivity. Step one: calculate the future value of each future amount to be received at a comparable point in time. Step two: sum all future values at a comparable point in time together to determine the future value of the known mixed stream. You deposit ,000 now, ,500 in one year, ,000 in two years and ,500 in three years in an account paying 10% interest per annum. The approach to calculating the present value of a known mixed stream also involves a two step process and once again requires value additivity. Step one: calculate the present value of each future amount to be received at a comparable point in time (usually t=0).
