【正文】 。 2022 Pearson Education Australia Pty Limited Slide: 1 62 ? Example Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 60 Future Value annuity If you invest $1,000 at the end of the next 3 years, at 8%, how much would you have after 3 years? 0 1 2 3 1000 1000 1000 Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 58 Annuities –Annuity: a sequence of equal cash flows, occurring at the end of each period. 0 1 2 3 4 Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 56 ? Example Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 54 0 5 PV = 5,000 FV = 11,933 Present Value single sums If you sold land for $11,933 that you bought 5 years ago for $5,000, what is your annual rate of return? Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 52 ? Example ? Example Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 51 ? In pounding we talked about the pound interest rate and initial investment。 2022 Pearson Education Australia Pty Limited Slide: 1 49 Future Value single sums If you deposit $100 in an account earning 6% with quarterly pounding, how much would you have in the account after 5 years? Mathematical Solution: FV = PV (FVIF i, n ) FV = 100 (FVIF .015, 20 ) (can’t use FVIF table) FV = PV (1 + I/m) m x N FV = 100 ()20 = $ 0 20 PV = 100 FV = ? Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 47 ? Example ? Example ? Example ? Example Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 45 Future Value single sums If you deposit $100 in an account earning 6%, how much would you have in the account after 5 years? Mathematical Solution: FV5= FV4 (1+i) 1 =PV (1 + i)5 =100 ()5 = $ 0 5 PV = 100 FV = ? Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 43 Future Value single sums If you deposit $100 in an account earning 6%, how much would you have in the account after 3 year? Mathematical Solution: FV3= FV2 (1+i) 1 =PV (1 + i)3 = 100 ()3 = $ 0 3 PV = 100 FV = ? Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 41 Future Value single sums If you deposit $100 in an account earning 6%, how much would you have in the account after 1 year? Mathematical Solution: FV1= PV (1 + i)1 = 100 ()1 = $106 0 1 PV = 100 FV = ? Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 39 Note: ?It’s easiest to use your financial functions on your calculator to solve time value problems. However, you will need a lot of practice to eliminate mistakes. Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 37 We know that receiving $1 today is worth more than $1 in the future. This is due to OPPORTUNITY COSTS. The opportunity cost of receiving $1 in the future is the interest we could have earned if we had received the $1 sooner. Today Future Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 35 Chapter 4: Mathematics of Finance Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 33 Reviews ? Introduce the history of financial management ? Understand the financial goal of decisionmaking ? Understand the limitations of a goal of profit maximisation ? Introduce riskreturn tradeoff of decisions ? Introduce market efficiency ? Distinguish between the forms of business anisations ? Understand the financial market Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 32 Capital amp。 2022 Pearson Education Australia Pty Limited Slide: 1 30 Components of financial markets ? Primary and secondary markets ? Capital and money markets ? Foreignexchange markets ? Derivatives markets ? Stock exchange markets Copyright 169。 investment banking How do brokers / investment bankers help firms issue securities? Advising the firm Underwriting the issue Distributing the issue Enhancing Credibility Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 27 Types of securities ? Treasury Bills and Treasury Bonds ? Corporate Bonds ? Preferred Shares ? Ordinary Shares Risk? High Returns? Relationship? Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 25 The flow of funds ? Savings deficit units ? Savings surplus units ? Financial markets facilitate transfers of funds from surplus to deficit units ? Direct flows of finds ? Indirect flows of funds Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 23 ? Limited pany (Ltd) and proprietary limited pany (Pty Ltd) – Ltd panies are generally public panies whose shares may be listed on a stock exchange, ownership in such shares being transferable by public sale through the exchange. – Pty Ltd panies are basically private entities, as the shares can only be transferred privately. Copyright 169。 2022 Pearson Education Australia Pty Limited Slide: 1 21 ? Partnership – The primary difference between a partnership and a sole proprietorship is that the partnership has more than one owner. – Each partner is jointly and seve