BMGT 340 Lecture Notes - Lecture 6: Cash Flow, Net Present Value, Interest Rate

• School: University of Maryland
• Department: Business and Management
• Course: BMGT 340
• Professor: Michael Padhi

Document Summary

You will be able to pay her next month, in each of the next two months, and then each month for months 4 through 6. 90/(1. 005)^5 + 90/(1. 005)^6 = 500. 90: you are considering an investment that will pay you in one year, in two years and in three years. 2000, 2500, 2900, 3500 over the next eight years (one cash payment per year). You require an 11. 5% return on your investment. What is the most you would invest today? (in other words, what is the present value of this cash flow stream?) Round to the nearest cent: timeline (a) 0@0 --- 1000@1 --- 1200@2 --- 1500@3 --- 1700@4 --- 2000@5 -- 2500@6 --- 2900@7 --- 3500@8 (b) npv(11. 5, 0, {1000, 1200, 1500, 1700, 2000, 2500, 2900, 3500}) = 9324. 30: now suppose that your aunt gives you the money, and then despotis your payments in the bank each month.