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Analytic Methods for Lawyers (Finance)

Analytic Methods for Lawyers (Finance). Present value [last updated 13 Apr 09]. Life cycle funds. Compare. What is the value of $1000?. What is the value of $1000? (how much, when, risk). “Investing" is laying out money today to receive more money tomorrow.

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Analytic Methods for Lawyers (Finance)

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  1. Analytic Methodsfor Lawyers(Finance) Present value [last updated 13 Apr 09]

  2. Life cycle funds Compare

  3. What is the value of $1000?

  4. What is the value of $1000? (how much, when, risk)

  5. “Investing" is laying out money today to receive more money tomorrow.

  6. I offer you either $500 today or $800 in three years. How do you decide?

  7. How much today to have $800 in three years?(assume 10%)

  8. How much today to have $800 in three years?(assume 10%) $601 now = $800 in 3 years (assuming a 10% rate for money)

  9. How much today to have $800 in three years? (assume 20%)

  10. How much today to have $800 in three years? (assume 20%) $463 now = $800 in 3 years (assuming a 20% rate for money)

  11. Present value PV = FV / (1+ i)n 7 6 FV 5 4 3 2 0 1 PV

  12. * 22.1 million payable over 20 years - $1,105,000/year *

  13. * 22.1 million payable over 20 years - $1,105,000/year *

  14. Warren Buffett: lottery is “tax on ignorance” Income tax / estate tax

  15. What have we learned?(discounted cash flow)

  16. What is PV ofan annuity? What is PV ofstructured court settlement? What is PV ofdividend stream? What is value ofa GE 10.5% bond? What is price ofGoogle stock? Law & Valuation

  17. Bond pricing You own a $20,000 GE bond that has 10 more years until it matures. The bond pays interest of 10.5%, with semiannual interest payments. The GE bond is rated BBB. Recently, you learn 10-year BBB-rated bonds are paying 8.9% interest. You are offered $21,500 for the GE bond - should you sell?

  18. The end

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