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    Q2 Fall 1107

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    Jamie Woods
    The document is a video lecture that discusses time value of money concepts like present value, future value, and cash flows. It provides examples of writing present value equations in factor notation for a sample cash flow diagram with both positive and negative cash flows over time. It also asks students to write an equivalent present value equation using a different factoring and to calculate the present value of the cash flows when the interest rate is 10%.

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    Q2 Fall 1107

    Uploaded by

    Jamie Woods
    20 views2 pages
    The document is a video lecture that discusses time value of money concepts like present value, future value, and cash flows. It provides examples of writing present value equations in factor notation for a sample cash flow diagram with both positive and negative cash flows over time. It also asks students to write an equivalent present value equation using a different factoring and to calculate the present value of the cash flows when the interest rate is 10%.

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    Q2Fall1107

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    The document is a video lecture that discusses time value of money concepts like present value, future value, and cash flows. It provides examples of writing present value equations in factor notation for a sample cash flow diagram with both positive and negative cash flows over time. It also asks students to write an equivalent present value equation using a different factoring and to calculate the present value of the cash flows 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
    20 views2 pages

    Q2 Fall 1107

    Uploaded by

    Jamie Woods
    The document is a video lecture that discusses time value of money concepts like present value, future value, and cash flows. It provides examples of writing present value equations in factor notation for a sample cash flow diagram with both positive and negative cash flows over time. It also asks students to write an equivalent present value equation using a different factoring and to calculate the present value of the cash flows when the interest rate is 10%.

    Copyright:

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    of 2

    EC 314: Public and Private Investment Fall 2011 Q2: Time Value #7 http://youtu.

    be/v6TXD-7NUz4

    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 (1+i)N iN 1 G i2 (1+i)N 1(1+g)N (1+i)N A1 ig

    or P = A1

    N 1+i

    if : i = g Not Factor Note

    Consider the following cash ow diagram.

    0 5

    2 2 2 2 4 8 16

    Cash Flow

    10 15 20 25 30 0 2 4 6

    32
    8 10

    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: See Video 2. Answer: See Video 3. Answer: The present worth is -21.670752105293

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