BUS 330 Lecture Notes - Lecture 6: Cash Flow, Compound Interest, Opportunity Cost
22 Mar 2017
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Bus 330 finance | chapter 5: time value of money (ppt notes) Compare cash flows at single point in time to make right investment decision: usually calculate present value when making investment decisions. Computational tools: financial calculators, spreadsheets, cash flow signs. Single amount lump sum amount either held currently/expected at future date. Annuity level periodic stream of cash flow. Mixed stream stream of unequal periodic cash flows. Future value (fv) value @ given future date of an amount placed on deposit today and earning interest at specified rate: apply compound interest over specified period of time. Compound interest interest earned on deposit and has become part of principal at end of specific pd. Principal amount of 12224 on which interest paid. Present value (pv) current $ val of future amount (amount of 12224 that would have to be invested today at given interest rate over specified pd to equal future amount)
