ADMN 4300H Lecture Notes - Lecture 3: Net Present Value, Cash Flow, Leotard

• School: Trent University
• Department: Business Administration
• Course: ADMN 4300H
• Professor: Jie Zhang

Document Summary

Time value of money: the one-period case, the multiperiod case, npv. If you were to invest ,000 at 5-percent interest for one year, your investment would grow to ,500: would be interest (,000 . 05, ,000 is the principal repayment (,000 1, ,500 is the total due. It can be calculated as: ,500 = ,000 (1. 05, the total amount due at the end of the investment is called the. In the one-period case, the formula for fv can be written as: Fv = c0 (1 + r: where c0 is cash flow at date 0 and r is the appropriate interest rate. If you were to be promised ,000 due in one year when interest rates are at 5-percent, your investment would be worth. In the one-period case, the formula for pv can be written as: pv = c1 / 1 + r, where c1 is cash flow at date 1 and r is the appropriate interest rate.