Management and Organizational Studies 2310A/B Chapter Notes - Chapter 4: Savings Account, Cash Flow

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Danny Morrison

Document Summary

4. 1 valuing a stream of cash flows: stream of cash flows: a series of cash flows lasting several periods. Plan to deposit money into bank account for three years, at the end of each year. Take deposit date 1 and move it forward to date 2, because it is at the same time period as date 2 (combine them), take the combined to deposit 3. This equation provides a general formula for present value of the stream. Perpetuities: perpetuity: a stream of equal cash flows that occur at regular intervals and last forever, eg. Annuities: annuity: stream of n equal cash flows paid at regular intervals, annuity ends after some fixed number of payments. 4. 3 solving for variables other than the present value or future value: sometimes we know the present value or future value, but do not know one of the variables.