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CHAPTER 2 Time Value of Money

Which would you rather have?Today In One Year Int. Rate$100$1000%$100$1m 999,900%$100$1,000900%$100$500400%$100$200100%$100$15050%$100?$110?10%$100?$105?5%. Time lines. Show the timing of cash flows.Tick marks occur at the end of per

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CHAPTER 2 Time Value of Money

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    1. CHAPTER 2 Time Value of Money Future value Present value Annuities Rates of return Amortization

    2. Which would you rather have? Today In One Year Int. Rate $100 $100 0% $100 $1m 999,900% $100 $1,000 900% $100 $500 400% $100 $200 100% $100 $150 50% $100? $110? 10% $100? $105? 5%

    3. Time lines Show the timing of cash flows. Tick marks occur at the end of periods, so Time 0 is today; Time 1 is the end of the first period (year, month, etc.) or the beginning of the second period.

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