台湾大学：《财务管理》双语版 Chapter 3 The Time Value of Money

Fundamentals of Corporate Finance Third edition Chapter 3 The Time Brealey Myers Marcus Value of Money ndamentals of Corporate Finan Brealey Myers Marcus slides by Matthew will IrwinMcGraw-Hill CThe McGraw-Hill Companies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 3- 1 Irwin/McGraw-Hill Chapter 3 Fundamentals of Corporate Finance Third Edition The Time Value of Money Brealey Myers Marcus slides by Matthew Will Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc.,2001

3-2 Topics Covered S Future values S Present values MTONEY MUltiple Cash Flows pErpetuities and Annuities INflation time value SEffective Annual Interest rate Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 3- 2 Irwin/McGraw-Hill Topics Covered Future Values Present Values Multiple Cash Flows Perpetuities and Annuities Inflation & Time Value Effective Annual Interest Rate

Future values Future value -amount to which an investment will grow after earning interest Compound Interest -Interest earned on interest Simple interest Interest earned only on the original investment Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 3- 3 Irwin/McGraw-Hill Future Values Future Value - Amount to which an investment will grow after earning interest. Compound Interest - Interest earned on interest. Simple Interest - Interest earned only on the original investment

3-4 Future values Future Value of S100=FV FV=$100×(1+r) Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 3- 4 Irwin/McGraw-Hill Future Values Future Value of $100 = FV F V r t = $100  (1+ )

3-5 Future values FV=$100×(1+r) Example- FV What is the future value of $100 if interest is compounded annually at a rate of 6%0 for five years? Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 3- 5 Irwin/McGraw-Hill Future Values FV r t = $100  (1+ ) Example - FV What is the future value of $100 if interest is compounded annually at a rate of 6% for five years?