FINANCE 101
FIN 101
Exam 1
Chapter 1
Commerce Bank Credit What does your credit card really cost you? APR- Annual Percentage Rate Prime 3.25%
Amount: $51,649
Rate: 4%
Years: 4 = $60,422.02
Time Value of Money- TVM Future Value FV=PV*(1+i)^n FV= future value PV= present value i= interest rate n= time
The Rule of 72
If at 10%, it will take 7.2 to double (just divide 72 by 10) 72 DIVIDED BY ANY NUMBER is how long it will take to double Present value PV=FV/(1+i)^n FV= future value PV= present value i= interest rate n= time
Annuity= an individual present/future value
IRA (10% compounding) Investor A- Age 16 invests $2,000 for 8 years and stops Results- $1,361,797 Investor B- Age 23 $2,000 for 43 years until age 65 Results- 1,303,282
Mortgage
30 years- $200,000 home 4.0% 3.75% Payment- $954.83 Payment- $926.23 Total payments- $343,739.43 Total payments- $333,483.00
Chapter 2 Financial Statements and Plans Special Planning Concerns 1) Dual income families 2) Employee benefit choices 3) Other extenuating circumstances:
First Job Divorce
Marriage Change in health
Children Loss of job
Death of family member Change in economy
Time Value of Money
Putting a dollar value on financial goals
Types of TVM calculations
Single sum- one lump sum investment with no more additions or subtractions
Annuity- a series of equal payments made at fixed time intervals for a specified number of periods
Future value The value your invested money will grow to, earning a specific rate of interest over a given time period - compounding.
Present Value The amount needed today to invest at a specific rate of interest over a given time period to accumulate the desired future amount Balance sheet equation- assets= liabilities + net worth
Assets - Liabilities = Net Worth (Fair market (Payoff amount of
Exam 1
Chapter 1
Commerce Bank Credit What does your credit card really cost you? APR- Annual Percentage Rate Prime 3.25%
Amount: $51,649
Rate: 4%
Years: 4 = $60,422.02
Time Value of Money- TVM Future Value FV=PV*(1+i)^n FV= future value PV= present value i= interest rate n= time
The Rule of 72
If at 10%, it will take 7.2 to double (just divide 72 by 10) 72 DIVIDED BY ANY NUMBER is how long it will take to double Present value PV=FV/(1+i)^n FV= future value PV= present value i= interest rate n= time
Annuity= an individual present/future value
IRA (10% compounding) Investor A- Age 16 invests $2,000 for 8 years and stops Results- $1,361,797 Investor B- Age 23 $2,000 for 43 years until age 65 Results- 1,303,282
Mortgage
30 years- $200,000 home 4.0% 3.75% Payment- $954.83 Payment- $926.23 Total payments- $343,739.43 Total payments- $333,483.00
Chapter 2 Financial Statements and Plans Special Planning Concerns 1) Dual income families 2) Employee benefit choices 3) Other extenuating circumstances:
First Job Divorce
Marriage Change in health
Children Loss of job
Death of family member Change in economy
Time Value of Money
Putting a dollar value on financial goals
Types of TVM calculations
Single sum- one lump sum investment with no more additions or subtractions
Annuity- a series of equal payments made at fixed time intervals for a specified number of periods
Future value The value your invested money will grow to, earning a specific rate of interest over a given time period - compounding.
Present Value The amount needed today to invest at a specific rate of interest over a given time period to accumulate the desired future amount Balance sheet equation- assets= liabilities + net worth
Assets - Liabilities = Net Worth (Fair market (Payoff amount of