university_of_saskatchewan公司財務(wù)導(dǎo)論(金融學(xué))e(參考版)
2025-01-07 10:13本頁面
【正文】 The Time Value of Money Fall 2021 COMM 203 2 Present Value and Future Value ? With positive interest rates, money “grows” over time ? For a fixed amount of cash flow today, how much is it worth in the future? = future value ? To receive a fixed cash flow in the future, how much to invest today? = present value Fall 2021 COMM 203 3 Single Cash flow, One Period Example Annual interest rate =10%. 1. Deposit $1 in your bank account. How much is it worth in one year? ., future value of $1 today? 2. To reach $1 in your account in one year, how much to deposit today? ., present value of $1 to be received in one year? Fall 2021 COMM 203 4 Single Cash flow, One Period ? Given a future cash flow and the interest rate, find the present value ? Given current cash flow and the interest rate, find the future value ? The onetoone relationship between FV and PV rCCPV?? 1)(11)1()( 00 rCCFV ??)1(01 rCC ??Fall 2021 COMM 203 5 Compound Interest vs Simple Interest Example: You deposit $100 today in your bank account. r = 10%. In 2 years time, if ? simple interest FV = $100 + 2(100*) = $120 ? pound interest, FV =100* (1+ .1)(1+.1) = $100 * (1+2*+*) = $121 ? Compound interests = earn interests on interests ? Compound interests are used in finance Fall 2021 COMM 203 6 Example Q. Deposit $5,000 today in an account paying 12%. ? How much will you have in 6 years, assuming interests are pounded annually? ? How much is simple interest?
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