BUSN 70 Lecture Notes - Lecture 57: Interest, Net Present Value, Mutual Fund
13 Mar 2021
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Introduction to valuation: the time value of money, net present value, internal rate of. Present value earlier money on a time line. Future value later money on a time line. Interest rate exchange rate between earlier money and later money. Use the row of keys for solving any of the fv, pv, fva, pva, fvad, and pvad problems. Clr tvm: clears all of the inputs into the above tvm keys. Table 4. 4 know formula pv equation & what terms mean for midterm. Suppose you invest for one year at 5% per year. Value in one year = principal + interest = 1000 + 50 = 1050. Future value (fv) = 1000(1 + . 05) = 1050. Suppose you leave the money in for another year. Fv = 1000(1. 05)(1. 05) = 1000(1. 05) 2 = 1102. 50. Simple interest - the same interest annually calculated off of the base. Compound interest - builds off of the new base.
