Business Finance - Week 4
Business Finance - Week 4 FIN 3010-001
Popular in Business Finance
Popular in Finance
This 1 page Class Notes was uploaded by Anna Notetaker on Saturday October 3, 2015. The Class Notes belongs to FIN 3010-001 at Middle Tennessee State University taught by Gregory Nagel in Fall 2015. Since its upload, it has received 48 views. For similar materials see Business Finance in Finance at Middle Tennessee State University.
Reviews for Business Finance - Week 4
Report this Material
What is Karma?
Karma is the currency of StudySoup.
Date Created: 10/03/15
Business Finance Week 4 Prof Nagel Chapter 4 Present Value PV is the current value of future cash ows discounted at the appropriate discount rate Future Value FV is the amount an investment is worth after one or more periods Simple interest is the interest earned only on the interest principal Compound interest is the interest that is earned on principal and on the interest received Future Value Formula FV PV 1 rquott As t increases FV increases as well Present Value Formula PV FV 1 rquott As t increases PV decreases as well As interest rate goes up so does the risk Discount Rate Formula R FV PVquot1t 1 Number of Periods Formula T NFVPV N1 r Present Value is worth less than Face Value because 1 Opportunity Cost 2 Risk and Uncertainty 3 Discount Rate f time risk Discounting is when you are nding the present value of one or more future amounts l Symbols PV Present value what future cash ows are worth today FV Future value what cash ows are worth in the future R interest rate rate of return or discount rate per period typically but not always one year T number of period typically but not always the number of years C cash amount