25300 Lecture 4: Lecture 4 - Time Value of Money 2
Is a number of equal cash flows occurring at equal time intervals
•
Assumes all cash flows occur at THE END of each period
•
○
PMT: the annuity payment
○
n: the number of payments
○
i: the per period interest rate
○
Future value:
•
Is calculated at the BEGINNING of the period
○
Assumes the first payment made is at the end of the first period
○
○
Present value:
•
○
Amortisation schedule:
•
Annuity
Is a perpetual annuity
•
An annuity that continues forever
•
There is no future value
•
•
Perpetuity
Lec 4 TVM 2
F Page 8
