HTA 602 Lecture Notes - Lecture 6: Net Present Value, 0 (Year), Preferred Stock

• School: Ryerson University
• Department: Hospitality and Tourism Management
• Course: HTA 602
• Professor: Bernard Mc Evoy

Document Summary

You currently have ,000 in a bank account earning 8% interest. You think you will be able to deposit an additional ,000 at the end of each of the next three years. Find the value at year 3 of each cash flow and add them together. Today (year 0): fv = 7000(1. 08)3 = 8,817. 98. Year 1: fv = 4,000(1. 08)2 = 4,665. 60. Year 2: fv = 4,000(1. 08) = 4,320. Today (year 0 cf): 3 n; 8 i/y; -7000 pv; cpt fv = 8817. 98. Year 1 cf: 2 n; 8 i/y; -4000 pv; cpt fv = 4665. 60. Year 2 cf: 1 n; 8 i/y; -4000 pv; cpt fv = 4320. Total value in 3 years = 8817. 98 + 4665. 60 + 4320 + 4000 = 21,803. 58. Suppose you invest in a mutual fund today and in one year. Year 0 cf: 2 n; -500 pv; 9 i/y; cpt fv = 594. 05.