Summary
Timing of Cash Flows To understand the true value and strength of cash, it is necessary to consider its timing. This is relevant for investments for the future and for analyses of the value of projects that require investment today…
Unequal Payments Using a Financial Calculator or Microsoft Excel
Learning Outcomes By the end of this section, you will be able to: Using a Financial Calculator A financial calculator provides utilities to simplify the analysis of uneven mixed cash streams (see Table 9.8). Earlier, we explored the future value of…
Timing of Cash Flows
Learning Outcomes By the end of this section, you will be able to: Multiple Payments or Receipts of Unequal Value: The Mixed Stream At this point, you are familiar with the time value of money of single amounts and annuities…
Why It Matters
Figure 9.1 Capital investment in production equipment such as this robotic arm requires extensive analysis of the benefits the investment is likely to produce over time. (credit: modification of “Webb Telescope Crew Flexes Robotic Arm at NASA” by Chris Gunn/NASA/flickr, CC BY…
Summary
Perpetuities A perpetuity is an investment that is intended to provide an expected return indefinitely, either remaining constant or growing by an incremental amount. Preferred stock is a common example with a preestablished dividend formula. An indefinite stream of payments…
Equal Payments with a Financial Calculator and Excel
Learning Outcomes By the end of this section, you will be able to: Solving Time Value of Money Problems Using a Financial Calculator Since the 1980s, many convenient and inexpensive tools have become available to simplify business and personal calculations,…
Stated versus Effective Rates
Learning Outcomes By the end of this section, you will be able to: The Difference between Stated and Effective Rates If you look at the bottom of your monthly credit card statement, you could see language such as “The interest…
Loan Amortization
Learning Outcomes By the end of this section, you will be able to: Types of Loans Funds can be loaned to businesses of any type, including corporations, partnerships, limited liability companies, and proprietorships. Bankers often refer to these lending structures…
Annuities
Learning Outcomes By the end of this section, you will be able to: Calculating the Present Value of an Annuity An annuity is a stream of fixed periodic payments to be paid or received in the future. Present or future values of…
Perpetuities
Learning Outcomes By the end of this section, you will be able to: In Time Value of Money I, we learned that the value of money changes with the passage of time. Decision-makers consider how investments, projects, and even opportunity costs…