Chapter4FutureValue,PresentValueandInterestRatesMcGraw-Hilly/rwinCopyright 2006byTheMcGraw-Hill Companies,Inc.All rights reserved
McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 4 Future Value, Present Value and Interest Rates
CONTENSO4.1Future Valueand CompoundInterest4.2PresentValue4.3InternalRateofReturn4.4CouponBondandPresent Value4.5RealandNominalInterestRates4-2
4-2 CONTENS 4.1 Future Value and Compound Interest 4.2 Present Value 4.3 Internal Rate of Return 4.4 Coupon Bond and Present Value 4.5 Real and Nominal Interest Rates
4.1Futuree Value and CompoundOInterest1. Future ValueFuture Value is the value on some futuredate of an investment made today4-3
4-3 4.1 Future Value and Compound Interest 1. Future Value Future Value is the value on some future date of an investment made today
Future Value and CompoundC00Interest$100 + $100(0.05) = $105PVFV+Interest=PVFVPV*i=+PV= PresentValueFV=FutureValuei = interest rate (as a percentage)4-4
4-4 Future Value and Compound Interest $100 + $100(0.05) = $105 PV + Interest = FV PV + PV*i = FV PV = Present Value FV = Future Value i = interest rate (as a percentage)
FutureValueandCompounddInterestFutureValue inone yearFV = PV*(1+i)4-5
4-5 Future Value and Compound Interest Future Value in one year. FV = PV*(1+i)