TIME VALUE OF MONEY FORMULA SHEET # TVM Formula For: 1 Future Value of a Lump Sum. (FVIFi‚n) Compounded/Payments (m) Times per Year Annual Compounding FVn = PV( 1 + i )n 2 FV 1 i PV = Present Value of a Lump Sum. (PVIFi‚n) -n Future Value of an Annuity. (FVIFAi‚n) FVAn = CF 4 Present Value of an Annuity. (PVIFAi‚n) 1 - ( 1 + i )-n PVAn = CF i 5 Present Value of Perpetuity. (PVA ) 6 Effective Annual Rate given the APR. 7
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APPEARANCES CAN BE DECEPTIVE 1. There is an old adage “all that glitters is not gold”.Gold is bright yellow metal and very valuable. But there are many worthless things looking equally bright yellow. We should not therefore‚ think that a thing is gold is simply because it is bright yellow. So‚ the proverb teaches us that we should not judge things by their outward appearances. 2. A person may be well dressed and may look a gentle man; but in reality he may be a cheater or a thief. A person
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The Advantages and Disadvantages of Winning the Lottery Have you ever wished that you had won the lottery? The lottery can change your life forever but it can also be changed in unexpected and drastic ways. The possibilities of what happens after you win the lottery are in your hands. You could lose your friendships and family member’s trust or maybe you could be intelligent with the money you’ve won and create for yourself endless possibilities‚ one this is for sure your privacy is going
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To most people winning the lottery is a good thing. In this story winning the lottery might not be so good. Every year in a small village the people there have what’s called ¨ The Lottery.¨ It’s a tradition everybody including the kids have to do. Is winning the lottery a good thing? What if I told you when you win you get killed by all of the villagers with rocks. This is definitely not the type of lottery you or anyone wants to win. The way you get drawn is by something called the black
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The rate of interest is 10%. ( Ans 1331/- SNM ) 2. Calculate the FV ( compounded value )‚ if rs 1000/- is compounded @ 10% p.a semi-annually for 3 years. ( Ans 1340/-‚SNM ) 3. Mr investor invests rs 500/- ‚ rs 1000/- and rs 2000/- at the end of each year . Calculate the compound value at the end of 3 years compounded annually when interest is charged at 10% p.a. ( ansrs 3705 /-‚SNM ) 4. Find the compounded value of annuity when three equal yearly payments of rs 2000/- are deposited into an account
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to win the lottery. I’m sure that if anyone won the lottery they would be extremely ecstatic. Most of us expect winning the lottery to be a joyous and thrilling experience. But‚ what if it wasn’t? What if winning the lottery meant losing everything you have‚ including your life? In the short story‚ The Lottery by Shirley Jackson‚ this particular event occurs. The story takes place in a small rural village. Every year‚ all of the villagers put their names into a box to draw for a lottery. You may think
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Annuities # 2 Time Value of Money (TVM) Understanding how the time value of money works can be most easily explained by taking your initial investment let us say $10 by the end of year five it could be worth $100. This means you have earned $90 in the last five years. Next year‚ you invest $10 and at the end of year five it is worth $80 because interest has not accumulated on the time that was lost between year 1 and year 2. My example of this is that my fiancé put $3000 in each of his
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Bank Time Value of Money Analysis You have applied for a job with a local bank. As part of its evaluation process‚ you must take an examination on time value of money analysis covering the following questions. A. Draw time lines for (1) a $100 lump sum cash flow at the end of Year 2‚ (2) an ordinary annuity of $100 per year for 3 years‚ and (3) an uneven cash flow stream of -$50‚ $100‚ $75‚ and $50 at the end of Years 0 through 3. ANSWER: [Show S5-1 through S5-4 here.] A time line is
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I According to Wikipedia.com‚ “Present value is the value on a given date of a future payment or series of future payments‚ discounted to reflect the time value of money and other factors such as investment risk. Present value calculations are widely used in business and economics to provide a means to compare cash flows at different times on a meaningful "like to like" basis.” (1) In this paper‚ we are going to examine why the concept of present value is so important to corporate finance. We
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UNDERSTANDING THE TIME VALUE MONEY FORMULA TIME VALUE OF MONEY TRIDENT UNIVERSITY INTERNATIONAL AVIE MARIE JOHNSTONE STRATEGIC CORPORATE FINANCE FIN501 MODULE 2 SESSION LONG PROJECT PROFESSOR WALTER
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