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Chapter 1

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17 views11 pages

Chapter 1

Uploaded by

yara.fayad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Single cash flow Future Value

Input
Single cash flow $1,032.47
Discount rate/ period 2.90%
Number of periods 5

Future value using a time line


Period 1 2 3 4 5
Cash flow $1,032.47
Future value $ 1,190.12

Future value using the formula


Future value $ 1,191.12

Future value using the FV function


Future value $1,191.12
Single cash flow Present value

Input
Single cash flow $1,723.48
Discount rate/ period 6.80%
Number of periods 6

Present value using a time line


Period 0 1 2 3 4
Cash flow
Present value using a time line

Present value using the formula


Present value $ 1,161.39

Present value using PV function


Present value $1,161.39
5 6
$1,723.48
$ 1,161.39
Annuity System of four Annuity variables

Input
Payment $24.39
Discount rate/period 6%
Number of periods 11
Present value $192.38

Annuity present value using a time line


Period 0 1 2 3 4
Cash flows $24.39 $24.39 $24.39 $24.39
Present value of each cash flow 23.01 21.71 20.48 19.32
Present value 192.36

Annuity present value using the formula


Present value $192.36
y variables

5 6 7 8 9 10 11
$24.39 $24.39 $24.39 $24.39 $24.39 $24.39 $24.39
18.23 17.19 16.22 15.30 14.44 13.62 12.85
NPV using constant discounting

Inputs
Real interest rate 5%
Inflation rate 3%

Nominal discount rate 8%

NPV using the timeline


period 0 1 2 3
Cashflows n 9000 16000 15000
PV of each cashflow -50000 833333.33% 13717.42 11907.48

NPV using the PV of cashflows -1994.52

Using the function -1994.52


4 5
8000 12000
5880.239 8166.998
NPV using general discounting

Inputs 1 2 3 4
Inflation 3% 2% 4% 5%
Real Interest Rates 5% 4% 6% 7%

Nominal Interest rates 8% 6% 10% 12%


Average Nominal rate 10%
NPV using the timeline
Period 0 1 2 3
CFs -50000 9000 16000 15000

PV of each Cashflow -50000 8333.333 14239.94 11269.72

NPV using the PV of cashflows -5359.50

NPV using function -4870.27


5
7%
9%

16%

4 5
8000 12000

5084.145 5713.356
Loan amortization
PV 100000
Interest rate 10%
Time period 10
Output
Years 0 1 2 3 4 5
Beg Balance 100000 $93,725.46 $86,823.47 $79,231.27 $70,879.86
Payment $16,274.54 $16,274.54 $16,274.54 $16,274.54 $16,274.54
Interest Component 10000 9372.546051 8682.346707 7923.127429 7087.986224
Principal Component $6,274.54 $6,901.99 $7,592.19 $8,351.41 $9,186.55

Loan Amortization
20,000.00

15,000.00

10,000.00

5,000.00

0.00

Payment Interest Component Principal Com


6 7 8 9 10
$61,693.31 $51,588.10 $40,472.37 $28,245.07 $14,795.04
$16,274.54 $16,274.54 $16,274.54 $16,274.54 $16,274.54
6169.330897 5158.810038 4047.237093 2824.506853 1479.50359
$10,105.21 $11,115.73 $12,227.30 $13,450.03 $14,795.04

ortization

mponent Principal Component

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