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FIRST PRINCIPLES OF VALUATION PowerPoint Presentation
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FIRST PRINCIPLES OF VALUATION

FIRST PRINCIPLES OF VALUATION

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FIRST PRINCIPLES OF VALUATION

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  1. FIRST PRINCIPLES OF VALUATION

  2. TIME VALUE OF MONEY:Six Functions of a Dollar • Future Value of a One Time Deposit • Present Value of a Single Future Cash Flow • Future Value of an Annuity • Present Value of an Annuity • Sinking Fund Payment • Payment to Amortize Debt

  3. TVM: Future Value of a One Time Deposit with Annual Compounding

  4. TVM: Future Value of a One Time Deposit with Annual CompoundingHP 10B Keystrokes Clear registers Annual compounding $1,000 present value 6% annual interest Two year term Compute future value

  5. TVM: Future Value of a One Time Deposit with Annual Compounding

  6. TVM: Future Value of a One Time Deposit with Periodic Compounding

  7. TVM: Future Value of a One Time Deposit with Periodic CompoundingHP 10B Keystrokes Clear registers Monthly compounding $1,000 present value 6% annual interest 24 months Compute future value

  8. TVM: Future Value of a One Time Deposit with Periodic Compounding

  9. TVM: Quoted Rates vs Effective Annual Rates

  10. TVM: Quoted Rates vs Effective Annual Rates

  11. TVM: Quoted Rates vs Effective Annual Rates

  12. TVM: Quoted Rates vs Effective Annual Rates

  13. TVM: Quoted Rates vs Effective Annual RatesHP 10B Keystrokes Clears registers Monthly compounding 6% annual interest Compute effective rate Display 4 decimal places

  14. TVM: Quoted Rates vs Effective Annual Rates

  15. TVM: Quoted Rates vs Effective Annual RatesHP 10B Keystrokes Clears registers Compute e to 0.06 power Subtract 1 Multiply by 100 to get the percent.

  16. TVM: Quoted Rates vs Effective Annual Rates

  17. TVM: Present Value of a Future CFAnnual Discounting

  18. TVM: Present Value of a Future CF Annual Discounting: HP 10B Keystrokes Clears registers One payment per year $1,000 future value CF in two years 8% annual interest Compute present value

  19. TVM: Present Value of a Future CFAnnual Discounting

  20. TVM: Annuities

  21. TVM: Future Value of an Annual Ordinary Annuity

  22. TVM: Future Value of an Annual Ordinary Annuity HP 10B Keystrokes Clear registers One payment per year $1,200 payment/year 6% annual interest For 3 years Compute future value

  23. TVM: Future Value of an Annual Ordinary Annuity

  24. TVM: Future Value of a Periodic Ordinary Annuity

  25. TVM: Future Value of a Periodic Ordinary AnnuityHP 10B Keystrokes Clears registers Monthly payments $100 payment/mo. 36 months (3 years) 6% annual interest Compute future value

  26. TVM: Future Value of a Periodic Ordinary Annuity

  27. TVM: Future Value of a Periodic Ordinary Annuity

  28. TVM: Future Value of a Periodic Annuity Due

  29. TVM: Future Value of a Periodic Annuity DueHP 10B Keystrokes Clear registers 12 payments per year 6% annual interest $100 payment/mo. Annuity due (BEGIN) 36 monthly payments Compute future value

  30. TVM: Future Value of a Periodic Annuity Due

  31. TVM: Present Value of an Annual Ordinary Annuity

  32. TVM: Present Value of an Annual Ordinary AnnuityHP 10B Keystrokes Clears registers 1 payment per year $1,200 payment/year 3 year term 8% annual interest Compute present value

  33. TVM: Present Value of an Annual Ordinary Annuity

  34. TVM: Present Value of an Annual Ordinary Annuity

  35. TVM: Present Value of a Periodic Ordinary Annuity

  36. TVM: Present Value of a Periodic Ordinary AnnuityHp 10B Keystrokes Clear registers Monthly payments $100 payment/mo. For 36 months 8% annual interest Compute present value

  37. TVM: Present Value of a Periodic Ordinary Annuity

  38. TVM: Present Value of a Periodic Annuity Due

  39. TVM: Present Value of a Periodic Annuity DueHP 10B Keystrokes Clear registers Monthly payments $100 monthly payment 8% annual interest 36 months Annuity due (BEGIN) Compute present value

  40. TVM: Present Value of a Periodic Annuity Due

  41. TVM: Annual Sinking Fund Payment for Ordinary Annuities

  42. TVM: Annual Sinking Fund Payment for Ordinary AnnuitiesHP 10B Keystrokes Clears registers One payment per year 6% annual interest $5,000 future value In three years Compute the annual payment.

  43. TVM: Periodic Sinking Fund Payment for Ordinary Annuities

  44. TVM: Periodic Sinking Fund Payment for Ordinary Annuities

  45. TVM: Periodic Sinking Fund Payment for Ordinary AnnuitiesHP 10B Keystrokes Clear registers Quarterly payments $25,000 future value 24 payments (6 years) 8% annual interest Compute quarterly payment

  46. TVM: Periodic Sinking Fund Payment for an Annuity Due

  47. TVM: Periodic Sinking Fund Payment for an Annuity DueHP 10B Keystrokes Clear registers Quarterly payments $25,000 future value 24 quarterly payments 8% annual interest Annuity due (BEGIN) Compute quarterly payment

  48. TVM: Annual Payment to Amortize Debt for Ordinary Annuities

  49. TVM: Annual Payment to Amortize Debt for Ordinary AnnuitiesHP 10B Keystrokes Clear registers Annual payments $5,000 present value 3 year term 8% annual interest Compute annual payment

  50. TVM: Periodic Payment to Amortize Debt for Ordinary Annuities