×

### Let's log you in.

or

Don't have a StudySoup account? Create one here!

×

or

## Chapter 3 Book Notes FIN 301 UIC

by: David Kavalerchik

81

0

3

# Chapter 3 Book Notes FIN 301 UIC Fin 301

Marketplace > University of Illinois at Chicago > Finance > Fin 301 > Chapter 3 Book Notes FIN 301 UIC
David Kavalerchik
UIC
GPA 3.2

Get a free preview of these Notes, just enter your email below.

×
Unlock Preview

These notes cover the entirety of chapter 3 from "Financial Management: Core Concepts." It includes Future/Present value and the Rule of 72.
COURSE
Intro to Finance
PROF.
Ozgur Arslan Ayaydin
TYPE
Class Notes
PAGES
3
WORDS
CONCEPTS
UIC FIN finance flames Osgur FIN301 301 notes studysoup study soup blue
KARMA
25 ?

## Popular in Finance

This 3 page Class Notes was uploaded by David Kavalerchik on Tuesday February 2, 2016. The Class Notes belongs to Fin 301 at University of Illinois at Chicago taught by Ozgur Arslan Ayaydin in Spring 2016. Since its upload, it has received 81 views. For similar materials see Intro to Finance in Finance at University of Illinois at Chicago.

×

## Reviews for Chapter 3 Book Notes FIN 301 UIC

×

×

### What is Karma?

#### You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 02/02/16
____________________________________________________________ Future Value and Compounding Interest Time value of money (TVM) refers to a dollar in hand today being worth  more than a dollar  received in the future because you can invest today’s dollar in  an interest­bearing account that  grows in value over time. We call this the future value (FV). The Single­Period Scenario Principal x Interest Rate = interest earned  The principal + interest earned = the future value of the principal.  Deposit initial principal of \$100 @ 5% interest. You’re paid out in a lump sum end of the year.  That \$105 is the future value of your \$100 principal.  The Multiple­Period Scenario Let’s say you leave that \$105 in the same account for another year. That \$105 will earn another  5%  ­­­>   \$100 × 0.05 + \$5.00 × 0.05 = \$5.25 The additional 25 cents is interest on interest and reflects the compounding of interest.  At the end  of two years, the account has \$110.25. future value = deposit × (1 + r) × (1 + r) or FV = PV × (1 + r)^n __________________________            Key FV = future value  PV = present value  r = interest rate  n = number of time periods __________________________ ____________________________________________________________ ____________________________________________________________ Present Value and Discounting The Single­Period Scenario Determine how much \$x one year from now is worth today at x% interest over the year. How much do I need to put away now for it to become \$x in the  future at x% interest rate? *You don’t need to memorize  both the PV & FV equations. When given a problem just use the FV equation and use simple algebra to solve for PV. The Multiple­Period Scenario As stated before, use the same FV equation, plug in your values and solve for PV.  ____________________________________________________________ Rearranged to solve for the interest rate: Rearranged to solve for the # of periods:  Rule of 72: To find the length of time it takes to double your money, just divide 72 by the  interest rate.

×

×

### BOOM! Enjoy Your Free Notes!

×

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

## Why people love StudySoup

Jim McGreen Ohio University

#### "Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Allison Fischer University of Alabama

#### "I signed up to be an Elite Notetaker with 2 of my sorority sisters this semester. We just posted our notes weekly and were each making over \$600 per month. I LOVE StudySoup!"

Bentley McCaw University of Florida

#### "I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Parker Thompson 500 Startups

#### "It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!
×

### Refund Policy

#### STUDYSOUP CANCELLATION POLICY

All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email support@studysoup.com

#### STUDYSOUP REFUND POLICY

StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here: support@studysoup.com

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to support@studysoup.com