Scribd
Upload
19 views

Time Value of Money

Time Value of Money

Uploaded by

mikasaxchann
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
19 views

Time Value of Money

Time Value of Money

Uploaded by

mikasaxchann
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 19

TIME VALUE OF MONEY CONCEPTS AND COMPUTATIONS

PRESENT AND FUTURE VALUES OF A SINGLE CASH FLOW

FV = PV*(1+r)t COMPOUNDING
PV = FV*(1+r)-t DISCOUNTING
Future Value Calculations
Present Value 1,000,000.00 1,000,000.00
Years 20 30
Rate 12% 12%
Future Value Excel function
Formula

Present Value Calculations


Future Value 0.00
Years 20
Rate 12.0%
Present Value Excel function
Formula
ANNUITY

Present Value of an Annuity Future Value of an Annuity


Payment 30,000.00 Payment
Interest Rate 10% Interest Rate
Number of Paym 30 Number of Paym
Present Value Future Value
PV if Annuity Due Future Value
Annuity Ord Formula

Solving for an Annuity Payment


Present Value 0.00
Future Value 0.00
Number of Paym 30
Interest Rate 10%
Annual Payment Amount

Solving for N in an Annuity Solving for i in an Annuity


Present Value 0 Present Value
Future Value 0.00 Future Value
Annual Payment 30,000.00 Annual Payment
Annual Rate 10.00% Number of Years
Number of Years Annual Rate

Uneven Cash Fl WACC 10% Weighted Average Cost of Capital


Year Cash Flow PV
0 (9,000.00) (9,000.00)
1 1,000.00 909.09
2 2,000.00 1,652.89
3 3,000.00 2,253.94
4 4,000.00 2,732.05
5 5,000.00 3,104.61

NPV
Yield (IRR)

Non-Annual Compounding Periods


Present Value 1,000,000.00
Annual Rate 10.00%
Years 30 Effective Annual Rate (EAR
Frequency Periods/Year FV (Excel) Using RATE
Annual 1
Semiannual 2
Quarterly 4
Bi-monthly 6
Monthly 12
Bi-weekly 26
Weekly 52
Daily 365
Continuous (Per Infinite
FV = PV * ert
How long for money to double?
1,000,000.00 1,000,000.00
40
12% 12%

ANNUITY Uniform stream of cash flows

0 1 2
2,000 2,000

2,000 2,000 2,000

Value of an Annuity
30,000.00
10.00%
30
ORDINARY
DUE

for i in an Annuity
0.00
0.00
30,000.00
30

ed Average Cost of Capital


FV

NPV =∑PVCIF - ∑PVCOF


∑PVCIF
∑PVCOF
NPV

Effective Annual Rate (EAR)


Formula Effect Function

r = ei - 1
or money to double?

Use "What If" tool

KINDS

3 4 5 ORDINARY
2,000 2,000 2,000 (begins at END of period)

2,000 2,000 2,000 DUE


(begins at BEGINNING of period)
0
Annuity Ordinary
PV (Formula)
PV (Excel Function)
NPV
NPV (Function)

0
Annuity Due
PV (Formula)
PV (Excel Function)
NPV
NPV (Function)
1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8
9 10 11 12 13 14 15 16

9 10 11 12 13 14 15 16
17 18 19 20 21 22 23 24

17 18 19 20 21 22 23 24
25 26 27 28 29 30

25 26 27 28 29 30
ANNUAL

1 2 3

SEMIANNUAL

1 2 3

QUARTERLY

1 2 3
Rate per period

29 30 10%

29 30

29 30
# of Periods

30
Compound Interest Calculation

Investment 5000
Annual Increase in Investment

Return 13.50%
Months in Year
Monthly return

Annual escalation flag


Dates 31-Aug-18

Opening balance
Monthly saving 0.00
Balance after monthly saving
Compounded return 0.00
Closing Balance

Cumulative savings
Cumulative returns

Start date 31-Aug-18


End date 31-Aug-18

Choose date 31-Jul-38


Calculated date 30-Sep-35

Data table (Do sensitivity analysis)


Rate: ranging from 2% to 20%
Investment ranging form 2500 to 30000
with increments of 2500
Prepare a Monthly amortization schedule for a house loan from pag-ibig given the

LOAN AMORTIZATION SCHEDULE


Loan Principal
% Down Payment
Amount to Finance
Annual rate of interest (See Pag-ibig Amortization Sched)
Number of years
Periods / year
Monthly Amort

Month Interest
an from pag-ibig given the following data

mortization Sched)

Month-end
Principal Principal Month Beg Balance Payment
Interest End Balance

You might also like