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Lecture 4

FIN 300 Lecture Notes - Lecture 4: Preferred Stock, Compound Interest, Common Stock


Department
Finance
Course Code
FIN 300
Professor
Laleh Samarbakhsh
Lecture
4

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Session 4

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2
Introduction
Future Values and Compounding
Present Values and Discounting
Multiple Cash Flows
Annuities and Perpetuities
Chapter 5 & 6

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3
Introduction
Example
Borrow $100 today, return $100 in 10 years Yes / no?
$148 in 10 years, $219 in 20 years, $324 in 30 years …
(given 4% of annual interest rate)
Basic Financial Principal
A dollar received today is worth more than a dollar
received tomorrow.
The value of cash flows received at different times can
never be directly compared.
Time value of money
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