BU111 Chapter Notes - Chapter 5: Effective Interest Rate, Formula 1000, Stock Valuation
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BU111 Full Course Notes
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Natasha park, bus111: the dollar one year from today is worth less than the dollar today, because of. Time value of money: risk: a dollar today is certain, whereas a dollar later may not materialize due to reduction, real interest: interest before we consider inflation. Fv singleamount=pmt (1+r)n r = interest or discount rate. N = number of periods in years r = 0. 04. Example: how much do you have to deposit today to have in a year (assume 4% interest compounded annually?) What"s the pv of to be received in 1 year (assume. Multiple amounts future value (fv: annuity: multiple payments of the same value, equally apart from each other in time. Used when you deposit starting at the end of this year. Used when you deposit starting today, time zero. If question doesn"t mention if the deposit is today, assume it is in the future and use.
