New User Special Price Expires in

Let's log you in.

Sign in with Facebook


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


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Finance 301, week 3 notes

by: Eugene Barretto

Finance 301, week 3 notes Fin 301

Eugene Barretto
View Full Document for 0 Karma

View Full Document


Unlock These Notes for FREE

Enter your email below and we will instantly email you these Notes for Managerial Finance

(Limited time offer)

Unlock Notes

Already have a StudySoup account? Login here

Unlock FREE Class Notes

Enter your email below to receive Managerial Finance notes

Everyone needs better class notes. Enter your email and we will send you notes for this class for free.

Unlock FREE notes

About this Document

These notes cover the Time Value of Money (ch.3) in Berk's Fundamentals of Corporate Finance 3rd edition book. It talks about the importance of how much money is worth in the future compared to pre...
Managerial Finance
Stanley Waite
Class Notes




Popular in Managerial Finance

Popular in Finance

This 2 page Class Notes was uploaded by Eugene Barretto on Thursday September 1, 2016. The Class Notes belongs to Fin 301 at University of Illinois at Chicago taught by Stanley Waite in Fall 2016. Since its upload, it has received 37 views. For similar materials see Managerial Finance in Finance at University of Illinois at Chicago.


Reviews for Finance 301, week 3 notes


Report this Material


What is Karma?


Karma is the currency of StudySoup.

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

Date Created: 09/01/16
Introduction to Managerial Finance CH 3: Time Value of Money Role of a Financial Manager: 1) Marketing – see how much revenues the firm made from advertising a product. 2) Economics – see how much consumers are willing to buy a product from a price decrease. 3) Organizational Behavior – determining the change in Management structure to increase efficiency. 4) Strategy – determining the competitor’s reaction to a move made by a firm such as: price increase or decrease. 5) Operations – determining the production costs after implementing the manufacturing plant. - The Financial Manager’s goal is to make sure the value of its benefits exceeds the cost and therefore, will increase the value of the firm. Competitive market – the value of the good is determined by the price in which it is traded in a competitive market. In a competitive market, the goods can be sold and bought at the same price. Valuation principle – when the value of the benefits exceeds the value of the costs, the decision will increase the market value of the firm. Law of One Price - In competitive markets, goods and securities must have the same prices because of the buy and sell orders cycle that will push the two prices together until there is no more profit. Arbitrage – the practice of going to different markets that have the same goods to buy and sell in order to take advantage of the price difference (a way of reducing costs and increasing benefits). Arbitrage opportunity – a situation in which it is possible to not make any investments or risks and still make a profit. Time Value of Money – difference in the value of money today and the value of money in the future. Also, the observation of the cash flows of money today and in the future have different values. Interest rate – r, the rate at which money can be lent or borrowed increases over time. Interest rate factor – converting cash flows across time using (1+r). Present Value (PV) – value expressed in present time. Formula: C/(1+r)^n Future Value (FV) – Value expressed in future terms. Formula: C X (1+r)^n Discount Factor – 1/(1+r). It is a discount today to buy money in the future. - The discount rate = interest rate Introduction to Managerial Finance Timeline – visual representation of the cash flows of an investment. - Steps for a timeline: 1) Construct it 2) Identify dates 3) Distinguishing Cash inflows from Cash outflows 4) Show time periods - Valuing Cash Flows at Different Points in Time 1) Compare and combine values at the same time. 2) Compounding – the process of moving forward along a timeline to determine a cash value in the future. Compound Interest – effect of earning interests to your original investment year after year. 3) Discounting – to find the value of a future cash flow, we must discount it at an earlier point in time. In order to do this, we can divide the cash flow by 1 plus the interest rate (1+r).


Buy Material

Are you sure you want to buy this material for

0 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

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

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!"

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!"

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."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund 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


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:

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

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.