Unit 3 (a)

TIME VALUE OF MONEY 1 :

ANALYZING SINGLE CASH FLOWS
货币时间价值1：分析单一现金流
- Chapter 4
Introduction
• Time Value of Money (TVM)
• Used by financial and non-financial business
managers as a powerful financial decision-making
tool.
• Key to making sound personal financial decisions.

货币时间价值（TVM）
被财务和非财务业务经理用作强大的财务决策工具。
做出正确的个人财务决策的关键。
Introduction
• Basic TVM Concept :基本TVM概念：
• $1 today is worth more than $1 next year.
今天的1美元比明年的1美元还值钱。
• TVM decisions are based on : TVM的决策基于：
• Size of cash flows.
现金流的规模。
• Timing between cash flows. 现金流之间的时间间隔。
回报率。
• Rate of return.

$ Today > $ Next Year

Organizing Cash Flows
• Timing of cash flows is key to successful
business operations.现金流的时间安排是
成功经营的关键。
• Cash Flow Analysis :现金流量分析
• A time line shows the magnitude of cash flows at
different points in time.时间线显示不同时间点的现金流大
小。
• Monthly
月刊
• Quarterly 每季的
每半年
• Semi-annually 每年
• Annually
Organizing Cash Flows组织现金流
• Cash Flow Analysis
• Inflow = Cash received流入=收到的现金
• a “positive” number“正数”
• Outflow = Cash going out流出=现金流出
• a negative number 负数

Inflow Outflow
Organization
Positive # Negative #
Example of a Time Line

Outflow Inflow
Future Value (FV)
• Value of an investment after one or more periods.一个或
多个时期后的投资价值。
• Example :
Refer to the previous time line, the $105 payment your
bank credits to your account one year from the original
$100 investment at 5% annual interest.
请参阅上一个时间表，即您的银行从原始100美元投资一
年内以5%年利息记入您账户的105美元付款。

($100 x 1.05 = $105 after one year)

• （100 美元 x 1.05 = 一年后 105 美元）
•
Single-Period Future Value单期未来价值
• Interest is earned on principal
• 利息按本金赚取
• Value in 1 year = Today’s Cash Flow + Interest
• 1 年内的价值 = 今天的现金流 + 利息
FV1 = Value in 1 year
PV = Total’s Cash Flow
i = interest rate
Example : Single-Period Future Value
单期未来价值
• Assumptions :假设：
• Invest $100 today.今天投资$100

• Earn 5% interest annually (one period).

• 每年赚取5%的利息（一个时期）。

•
Compounding and Future Value复利和未来
价值
• Compounding复合
• Interest is earned on both principal and interest.
利息从本金和利息中赚取。
• Today’s Cash Flow + Interest on Principal and
Interest on Interest = Value in 2 years今天的现
金流 + 本金利息和利息 = 2 年内的价值
•
Example : Compounding and Future Value
• Assumptions :假设
• Invest $100 today.
• Earn 5% annual interest for more than one year
(2 years in the following equation).赚取5%的年
利息超过一年（在以下等式中为2年）。
•
The Power of Compounding复合的力量
Compound interest is a powerful wealth-building tool à
Exponential Growth复利是一种强大的财富积累工具 à 指数增长
Present Value (PV)
• The opposite of Future Value (FV)
• Future Value = Compounding
• Present Value = Discounting
• 未来价值 （FV） 相反
• 未来价值 = 复利
• 现值 = 贴现
Present Value (PV)
• Discounting
• Value today of sum expected to be
received in future.预计将来收到的金额的
今天价值。
• Next period’s valuation ÷ One period of
discounting下一期的估值÷一个贴现期
•
Example : Discounting and Present Value
• Assumptions :假设
• Banks pays $105 in 1 year.银行在1年内支付
105美元。
• Interest rate = 5% interest per year.利率 = 每
年5%的利息。
• Present Value (PV :
Example : Present Value Over Multiple Periods

• Assumptions :
• $100 payment five years in the future.
• 五年后支付100美元。
• Interest rate = 5% interest per year.

• 利率 = 每年5%的利息。
Present Value with Multiple Rates具有多个利率的现值

• Concept : Discounting概念 ： 折扣
• Value today of sum expected to be received in
future -- Variable rates of interest over N
periods.预计未来收到的金额的今天价值 - N个时
期的可变利率。
•
Example : Present Value with Multiple Rates示例：
具有多个汇率的现值
• Assumptions :
• Banks pays $2,500 at the end of 3rd year.
银行在第三年年底支付2，500美元。
• Interest rate year 1 = 7%
• Interest rate year 2 = 8%
• Interest rate year 3 = 8.5%
Present Value and Future Value
• Concepts : Discounting &
Compounding概念：贴现和复利
• Move cash flows around in time.及时移动现金流。
• Use PV calculation to discount the cash flow.
使用 PV 计算对现金流进行贴现。
• Use FV calculation to compound the cash
flow.使用 FV 计算来复利现金流。
Example : Present and Future Value
• Assumptions : PV
• Expected cash flow of $200 in 3 years.预计3年内现
金流为200美元。
• Decision : change receipt of CF to 2 years (one year
earlier).决定：将CF的收据更改为2年（提前一年）。
• Discount rate = 6% per year
• PV calculation to discount the cash flow for 1
year. PV计算，以贴现1年的现金流。
•
Example : Present and Future Value
• Assumptions : FV
• Expected cash flow of $200 in 3 years.预计3年内现金流为
200美元。
• Decision : change receipt of CF to 5 years later.决定：将
CF的收据更改为5年后。
• Compound rate = 6% per year.复合率= 每年6%。
• FV calculation to compound the cash flow for 5 years. FV计
算，以复利5年的现金流。
Rule of 72
• Concept : Compound Interest概念 ： 复利
• How much time for an amount to double ?多少时间使金额翻倍？

• Example :
• Interest rate = 6% per year利率 = 每年6%
• Rule of 72 calculation : 72计算法则：
72 / 6 = 12 years
It takes roughly 12 years to double the original amount.
72 / 6 = 12 年
大约需要12年才能使原始金额翻倍。
Interest Rate to Double an Investment投资翻倍的利率
Computing Interest Rates计算利率
• Concept : Solving for Interest Rate
• 概念 ： 解决利率问题
Assumptions
• :
Bought asset for $350; Sold asset for $475
以350美元的价格购买了资产;以$475的价格出售资产
Timeframe : 3 years时间范围 ： 3 年
$475 = $350 x (1 + i)3
(1 + i)3 = 1.36
Take the cubic root : 1 + i = 1.11
i = 11%.
Solving for Time求解时间

• Concept : Solving for Time

• Assumptions/Known Data :假设/已知数据
• Starting Cash Flow
• Interest Rate
• Future Cash Flow
• 起始现金流
• 利率
• 未来现金流
Example : Solving for Time
• When interest rates are 9% per year, how
long will it take $5,000 to double ?
当利率为每年9%时，5，000美元需要多长时
间才能翻倍？
• Assumptions :
• Interest = 9% per year
• PV = - 5,000
• PMT = 0
• FV = 10,000

• Solution : 8.04 years

Texas Instruments :
德州仪器
TI-BA II Plus, or
TI-BA II Plus Professional
FINANCIAL
CALCULATOR WIZARD金融计算器向
导
Compounding and Future Value复利和未来价值

• Solve for 2 years :

INPUT 2 5 -100 0
N I/YR PV PMT FV
OUTPUT 110.25

What is the FV if we invest $100 today and earn 5%

annual interest for a two-year period ?如果我们今天投资
100美元，并在两年内赚取5%的年利息，那么FV是什么？
Compounding and Future Value
• Solve for 5 years :

INPUT 5 5 -100 0
N I/YR PV PMT FV
OUTPUT 127.63

What is the FV if we invest $100 today and earn 5%

annual interest for a five-year period ?如果我们今天投资
100美元，并在五年内赚取5%的年利息，那么FV是什么？
TVM Relationships Are Exponential Not Linear
TVM 关系是指数关系，而不是线性关系
What is the FV of $100 if invested for 20 years at 5% annual interest ?
如果以5%的年利率投资20年，100美元的FV是多少？
INPUT 20 5 -100 0
N I/YR PV PMT FV
OUTPUT 265.33
What is the FV of $100 if invested for 40 years at 5% annual interest?
如果以5%的年利率投资40年，100美元的FV是多少？

INPUT 40 5 -100 0
N I/YR PV PMT FV
OUTPUT 704.00
More than
double
TVM Relationships Are Exponential Not Linear
What is the FV of $100 if invested for 40 years at 5% annual interest ?
如果以5%的年利率投资40年，100美元的FV是多少？

INPUT 40 5 -100 0
N I/YR PV PMT FV
OUTPUT 704.00
What is the FV of $100 if invested for 40 years at 10% annual interest ?
如果以10%的年利率投资40年，100美元的FV是多少？

INPUT 40 10 -100 0
N I/YR PV PMT FV
OUTPUT 4,525.93
Exponential
指数
Present Value

Solve for 2 years :

INPUT 2 5 0 100.00
N I/YR PV PMT FV
OUTPUT
What is the PV if we can get $100 in the future and
discount for a two-year period at 5% annual interest ?如
果我们将来可以获得100美元，并以5%的年利息在两年内
贴现，那么PV是什么？
PV = - 90.70
Present Value
Solve for 5 years :

INPUT 5 5 0
N I/YR PV PMT FV
OUTPUT 100.00

What is the PV if we can get $100 in the future and discount

for a five-year period at 5% annual interest ?如果我们将来
可以获得100美元，并以5%的年利息在五年内贴现，那么PV
是什么？

PV = - 78.35
Solving for Time

INPUT 9 -5,000 0 10,000

N I/YR PV PMT FV
OUTPUT 8.04

How many years will it take for a $5,000 investment to

double to $10,000 at 9% annual interest ?
5，000美元的投资需要多少年才能翻倍到10，000美元，
年利率为9%？
Unit 3 (b)
TIME VALUE OF MONEY 2 :
ANALYZING ANNUITY CASH FLOWS
货币的时间价值2：分析年金现金流

- CHAPTER 5
Introduction
• Time Value of Money calculations货币
的时间价值计算
• can deal with either single cash flows,
可以处理单一现金流，
• or multiple cash flows over time.
或随时间推移的多个现金流。
Future Value of Multiple Cash Flows多个现金流
的未来价值
• Multiple Cash Flows多种现金流
• Regular, evenly-spaced规则，均匀分布
• Examples :
• Car loans and home mortgage loans
• Saving for retirement
• Companies paying interest on debt
• 汽车贷款和住房抵押贷款
• 退休储蓄
• 支付债务利息的公司
Future Value – Several Cash Flows
未来价值 – 多个现金流
• Concept : Compounding概念 ： 复合
• Value in the future.未来的价值。
• Different cash flows paid in at different
times.不同的现金流在不同的时间支付。
•
Example : Finding FV for Several Cash Flows
示例：为多个现金流查找 FV
• Assumptions :
• Invest $100 today (compounds for 3 years)
• 今天投资100美元（3年复合）
• Invest $125 at end of year 2 (compounds for 2
years)在第2年年底投资125美元（2年复合）
• Invest $150 at end of year 3 (compounds for 1
year)在第3年年底投资150美元（1年复合）
• Interest rates : 7% per year 利率 ：每年7%
•
Example : FV for Several Cash Flows
示例：多个现金流的 FV

Several
(Different)
Cash Flows
几种（不同的）
现金流
Future Value – Level Cash Flows水平现金流

• Concept : Compounding概念 ： 复合
• Also called “annuities”也称为"年金"
• Value in the future.未来的价值。
• Same cash flows paid in every period.每
个期间支付的现金流相同。
•
...
Finding FV – Level Cash Flows/Annuity

• Assumptions :
• Invest $100 at the end of each year for 5
years.每年年底投资100美元，为期5年。
• Interest rates : 8% per year 利率 ：每年
8%
•
Level Cash Flows Time Line水平现金流时间线

Level (Same) Cash Flows

Each Period水平（相同）每
个期间的现金流
Future Value – Multiple Annuities未来价值 – 多
种年金
• Concept : Compounding – annuity equation to compute
future value.概念：复利 - 年金方程计算未来价值。
• To solve for multiple annuities, compute FV for each
separately and add them together.要求解多个年金，请分
别计算每个年金的FV并将它们相加。
Finding FV – Multiple Annuities
• Assumptions :
• Invest $100 at end of years 1 - 3 at 8%.
• Invest $150 at end of years 4 - 5 at 8%.
• 在1 - 3年末投资100美元，占8%。
• 在4 - 5年末投资150美元，占8%。
•
Future Value – Multiple Annuities
Step 1 (same as FV of Level Cash Flows Calculation
与水平现金流计算的FV相同

Step 2
Step 3
Add two sums together –
FV of both is $690.66
将两个总和相加 – 两者的
FV 为 $690.66
Present Value of Multiple Cash Flows多个现金流的现值
• Multiple Cash Flows多种现金流

• Car loans and home mortgage loans.

汽车贷款和住房抵押贷款。
• Determining value of business opportunities.

确定商机的价值
• Concept : Discounting概念 ： 折扣

• Value of future sum today.今天未来总和的价值。

• Different cash flows paid in at different times.

不同的现金流在不同的时间支付
Present Value – Level Cash Flows现值 – 水平现金流
• Concept : Discounting概念 ： 折扣
• Value of future sum today.今天未来总和的价值。
• Level cash flows paid in at different times.在不同时间支
付的水平现金流。
• Most loans are set up with even payments throughout
the life of loan.大多数贷款都是在贷款的整个生命周期
内以均匀的付款设置的。
•
Finding PV – Level Cash Flows
• Assumptions :
• $100 payments at end of each year for 5 years.
每年年底支付100美元，为期5年。
• Interest rates : 8% per year
Present Value – Multiple Annuities
• Concept : Discounting
• Changing level cash flows.改变水平现金流。
• Ex : Alex Rodriguez’s baseball contract
Example : PV – Multiple Annuities
• Assumptions (Alex Rodriguez’s
Contract) :
• $10 million signing bonus.
• $21 million per year from 2001 – 2004.
• $25 million per year in 2005 and 2006.
• $27 million per year in 2007 – 2010.
• Interest rates : 8% per year
Example : PV – Multiple Annuities
Refer to Alex Rodriguez’s example, it is equivalent
to 3 annuities :
 Perpetuity – Special Annuity
• Concept : Discounting
• Stream of level cash flows that are paid forever.永久支付的水平
现金流流。
• Example : Preferred stocks (explained later)优先股（稍后解释）
• Value of investment is equivalent to the PV of all future annuity
payments.
• 投资价值相当于所有未来年金支付的PV。
 Perpetuities永久性

• Suppose you will receive a fixed payment

every period (month, year, etc.) forever. This
is an example of a perpetuity.
• You can think of a perpetuity as an annuity
that goes on forever.
• 假设您将在每个时期（月，年等）永久收到固
定付款。 这是永久性的一个例子。
• 您可以将永久资本视为永远存在的年金。

54
Present Value of a Perpetuity永久现值

• When we find the PV of an annuity, we think of

the following relationship:当我们发现年金的PV
时，我们会想到以下关系：
•
PV = PMT (PVIFA i, n )

55
Mathematically, 1
n
(PVIFA i, n ) =
1- (1 + i)
i
We said that a perpetuity is an
annuity where n = infinity. What
happens to this formula when n
gets very, very large?我们说过，永
久年金是n =无穷大的年金。 当n变得
非常非常大时，这个公式会发生什么？
56
When n gets very large,

1 this becomes zero.

1
So we’re left with PVIFA =
i
57
 Present Value of a Perpetuity

• So, the PV of a perpetuity is very

simple to find:永久性的PV很容易
找到：

PMT
PV =
i

58
Example: Perpetuity
What should you be willing to pay in order to
receive $10,000 annually forever, if you require
8% per year on the investment?如果您需要每年
8%的投资，那么为了永远每年获得10，000美元，
您应该愿意支付什么？

PMT $10,000
PV = =
i .08

= $125,000
59
Ordinary Annuities vs. Annuities Due普通年金与到期年金
Two Types of Annuities :
• Ordinary Annuity普通年金
•Payment occurs at the end of each period.付款发生在每
个期间结束时
(All previous examples showed ‘Ordinary Annuities) （所
有先前的例子都显示"普通年金"）

• Annuity Due到期年金
• Payment occurs at the beginning of each period.付款发
生在每个时期的开始。
•
Example : Annuity Due
• Five annuity-due cash flows basically same as payment
today plus 4-year ordinary annuity payment.五个年金到期
现金流基本与今天付款加上4年普通年金付款相同。
• Payments occur one period sooner than ordinary annuity,
and earn extra period of interest.还款比普通年金早一个时
期，并赚取额外的利息。
Future Value of Annuity Due到期年金的未来价值

• Concept : Compounding概念 ： 复合
• Value of future sum today.今天未来总和的价值。
• Cash flows at beginning of each period.每个期间开
始时的现金流。

(compound for one more period)

（再复合一段时间）
Future Value of Annuity Due到期年金的未来价值
• Assumptions :
• Assumes a 5-year annuity-due, each cash flow is equal
to $100.假设5年年金到期，每个现金流等于100美元
• The first cash flow compounds for 5 years5年来首次
现金流复合
• The last cash flow compounds for 1 year only.最后的
现金流仅复利1年。
• Interest rates : 8%

FV for a 5-year Ordinary Annuity

Present Value of Annuity Due
• Concept : Discounting
• Today’s value of future sum.
• Cash flows at beginning of each period.
• 今天的价值与未来总和。
• 每个期间开始时的现金流。
Present Value of Annuity Due
• Assumptions :
• 5-year annuity-due, each cash flow equals to $100. 5年
年到期，每个现金流等于100美元。
• The first cash flow is paid today – not discounted.第一
笔现金流是今天支付的，而不是贴现的。
• The last cash flow is discounted for 4 years.最后现金
流贴现4年
• All cash flows discounted for one year less than
ordinary annuity.所有现金流贴现一年，均低于普通年
金。
• Interest rates : 8% per year

PV for a 5-year Ordinary Annuity

Compounding Frequency复合频率
• Used in situations that do not use yearly time
periods.用于不使用年度时间段的情况。 For
example :
• Semi-annual bond payments (semi-annual compounding;
compound frequency = 2)半年度债券支付（半年复利;复合
频率= 2）
• Quarterly stock dividends (quarterly compounding;
compound frequency = 4)季度股票股息（季度复利;复合频
率= 4）
• Consumer loans – monthly payments (monthly
compounding; compound frequency = 12)消费贷款 – 每月
还款额（每月复利;复利频率 = 12）
•
Effect of Compounding Frequency复合频率的影响
• Assumptions :
• $100 deposit today; 12% annual interest rate.今天
存款100美元;12%年利率。
• Bank compounds interest at six months instead of
end of year.银行复利利率为六个月，而不是年底。
• Interest is earned on interest.利息是根据利息赚取的。
Total amount after one year一年后的总金额
= $100 x 1.06 x 1.06
= $112.36
(> $100 x 1.12 = $112 if the interest is compound
annually)
EARs and APRs
• Quoted, or nominal rate called “Annual Percentage Rate”
(APR).报价或称为"年利率"（APR）的名义利率。
• Rate that incorporates compounding called “Effective
Annual Rate” (EAR).包含复合的利率称为"有效年利率"
（EAR）。
• Relationship between APR and EAR

m = compound frequency
Example : EARs vs. APR
• Assumptions :
• Borrow $100 today; 12% annual interest
rate.今天借100美元;12%年利率。
• APR : Loan compounds annually -- you
pay 12.00% APR ： 每年的贷款复合物 - 您
支付12.00%
• EAR : Loan compounds monthly -- you pay
12.68%EAR ： 每月贷款复合物 - 您支付
12.68%
Finding Payments on Amortized Loan寻找摊销贷款的
付款
• Rearrange PV of annuity formula to solve for the
payment.重新安排年金公式的PV以解决付款问题。
Example : Payments on Amortized Loan
• Assumptions :
• You need $10,000 to buy a car; Loan term : 4 years;
Payment : Monthly.你需要10，000美元才能买一辆车;贷
款期限 ： 4年;付款：每月。
• Interest rate : 9% APR
• Use interest rate of 0.75% (= 9%/12) and 48 periods
(= 4 x 12)

•
End of Unit 3