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    Q201 Summer 2011

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    Jamie Woods
    This document provides information and questions about calculating the present value of cash flows using time value formulas. It includes equations in factor notation for present value, future value, annuities, and geometrically growing perpetuities. It also includes a cash flow diagram and asks the reader to write equations in factor notation for the present worth of the cash flows and calculate the present worth when the interest rate is 10%.

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    Q201 Summer 2011

    Uploaded by

    Jamie Woods
    59 views2 pages
    This document provides information and questions about calculating the present value of cash flows using time value formulas. It includes equations in factor notation for present value, future value, annuities, and geometrically growing perpetuities. It also includes a cash flow diagram and asks the reader to write equations in factor notation for the present worth of the cash flows and calculate the present worth when the interest rate is 10%.

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    Q201Summer2011

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    This document provides information and questions about calculating the present value of cash flows using time value formulas. It includes equations in factor notation for present value, future value, annuities, and geometrically growing perpetuities. It also includes a cash flow diagram and asks the reader to write equations in factor notation for the present worth of the cash flows and calculate the present worth when the interest rate is 10%.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    59 views2 pages

    Q201 Summer 2011

    Uploaded by

    Jamie Woods
    This document provides information and questions about calculating the present value of cash flows using time value formulas. It includes equations in factor notation for present value, future value, annuities, and geometrically growing perpetuities. It also includes a cash flow diagram and asks the reader to write equations in factor notation for the present worth of the cash flows and calculate the present worth when the interest rate is 10%.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
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    EC 314: Public and Private Investment Summer 2011 Q2: Time Value #1

    PASS Name:

    NO PASS

    (F |P, i, N ) (P |A, i, N ) (P |G, i, N ) (P |A1 , g, i, N )

    F = P (1 + i)N P =A P = P =
    (1+i)N 1 i(1+i)N N G (1+i) iN 1 i2 (1+i)N N N A1 1(1+g) (1+i) ig

    or P = A1

    N 1+i

    if : i = g Not Factor Note

    Consider the following cash ow diagram.

    10 5 0 5 10

    Cash Flow

    10

    11

    10
    0 2 4 6

    Period
    O By One

    1. Write an equation, in factor notation, that describes the present worth of this cash ow sequence.

    2. Write an equivelent equation in factor notation, i.e., decompose the cash ow dierently.

    3. Calculate the present worth of this series when the interest rate is 10.00%?

    Answer Key
    1. Answer: On your own. 2. Answer: On your own. 3. Answer: The present worth is 63.6160098171801

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