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Introductions

Introductions. Background Information. Mariya Pylypiv Education B.S. Accounting and International Economics M.S. Accounting and International Economics Ph.D. Student in Consumer and Family Economics If you have any questions or comment feel free to talk to me!. Aside from Purdue.

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Introductions

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  1. Introductions

  2. Background Information Mariya Pylypiv Education B.S. Accounting and International Economics M.S. Accounting and International Economics Ph.D. Student in Consumer and Family Economics If you have any questions or comment feel free to talk to me!
  3. Aside from Purdue Originally from Ukraine
  4. Aside from Purdue Fan of the outdoors Love basketball, dancing and ethnic foods, gardening …………..
  5. I am an Aunt!!! 
  6. Contact Information Email: mpylypiv@purdue.edu Office Hours Office MTHW 326 Appointment (send me an email) Facebook and Hotseat are also available to leave general questions and comments
  7. Recitation Format Announcements Recap weekly topics if not covered in lecture Apply TVM to subject matter
  8. Policies There is no excuse for daily quizzes Documented excuse required for exams Make-up exams are short answer/essay We move quickly, so read ahead! If we see student with more then one i-clicker , that individual and owners of other remotes will receive 0 points for all daily quizzes!
  9. Announcements Pre Course Questionnaire Due by Saturday (01/24/2014) 5:00 pm Available under the Assessments section on Blackboard

  10. Time Value of Money (TVM)

  11. Cash flows and Value Cash flows Single cash flows Evenly spaced time series of cash flows How does it time in with TVM
  12. Time Value of Money (TVM) Which is worth more to you? $100 given to you today, or $100 given to you a year from now Conversely, what about paying someone $100 today versus $100 a year from now When should you pay your bill? Right now? Wait until the last minute?
  13. Discounting and Compounding Discounting The method used to calculate the present value of a sum of money received in the future Compounding The method used to calculate the future valueof a sum of money received today
  14. Discounting and Compounding Compounding $120 $100 Discounting
  15. Opportunity Cost The rate of interest that you would need to receive in order to choose one alternative over the other The next best alternative Examples Lottery winnings lump sum vs. annual payments Discount the annual payments and see the trade off One individual’s opportunity cost may not be the same as another individual’s, even if the given scenario is the same
  16. Opportunity Cost
  17. TVM is in Investment TVM concepts are used to understand how to value financial assets The price of any financial asset is the discounted present value of all its future cash flows True for any traded asset Stocks Bonds Mutual Funds
  18. TVM is in Credit Credit card companies charge you interest on unpaid balances at the end of each month Computing the present value of such obligations will give you a good idea of what those credit obligations are worth Help you budget accordingly
  19. TVM is in Insurance Insurance companies calculate the premiums of policies based on present value calculations Insurance premiums is based expected costs Life insurance The longer you live, the less costly it is for the insurance company to insure you This is because you get to fund most of the policy payout yourself
  20. TVM is in Retirement Retirement is all about investments Again back to the starting point in the circle and TVM Retirement can look very different based on how you invest your money
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