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Time Value of Money

Time Value of Money. AGEC 489-689 Spring 2010. Page 60 in booklet. Time Value of Money…. Assume it is the year 2009 and you have been given the choice of a single payment of $500 paid to you ten years from now (2019) or a payment of $300 today. Which would you choose?.

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Time Value of Money

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  1. Time Value of Money AGEC 489-689 Spring 2010

  2. Page 60 in booklet

  3. Time Value of Money… Assume it is the year 2009 and you have been given the choice of a single payment of $500 paid to you ten years from now (2019) or a payment of $300 today. Which would you choose? 2009 2010 2011 2012 2013 ……. 2019

  4. Page 60 in booklet

  5. Present Value Interest Factor (PIF) Table PIFr,n = (1 + r) -n

  6. I would take the $300 today since it has a higher present value, given my discount rate of 6%, than $500 ten years from now. Page 61 in booklet

  7. Present Value Interest Factor (PIF) Table PIFr,n = (1 + r) -n

  8. Page 61 in booklet

  9. Equal Payment Present Value Interest Factor (EPIF) Table EPIFr,n = [1 – (1 / (1+ r)n)] / r

  10. Equal Payment Present Value Interest Factor (EPIF) Table EPIFr,n = [1 – (1 / (1+ r)n)] / r

  11. Pages 61-62 in booklet

  12. Present Value Interest Factor (PIF) Table PIFr,n = (1 + r) -n

  13. Present Value Interest Factor (PIF) Table PIFr,n = (1 + r) -n

  14. Page 62 in booklet

  15. Page 63 in booklet

  16. Pages 63-64 in booklet

  17. Page 64 in booklet

  18. Equal Payment Present Value Interest Factor (EPIF) Table EPIFr,n = [1 – (1 / (1+ r)n)] / r

  19. Page 64-65 in booklet

  20. Equal Payment Present Value Interest Factor (EPIF) Table EPIFr,n = [1 – (1 / (1+ r)n)] / r

  21. Page 65 in booklet

  22. Know equations 40, 44 and 45 Page 65-66 in booklet

  23. Let’s Work Some Problems

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