• Ch. 5 of Fundamentals of Corporate Finance o Time value of money o Time zero o Future value (fv) o Principal o Simple interest o Compounding o Compound interest o Discounting o Discount rate o Present value (pv) o Rule of 72 • Ch. 6 o Annuity o Perpetuity o Ordinary annuity o Present value of an annuity (PVA) o Amortization o Future value of an annuity (FVA) o Annuity due o Annual percentage
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These concepts deal with the time value of money and the other investment factors. “If decisions are made that ignore the interaction of scale and risk, then cash flows are misvalued and suboptimal operations decisions are made” (Lederer & Mehta). Companies use CAPM and DCF to figure out the greatest potential for highest yield of an investment based on average market returns. The Capital Asset Pricing Model (CAPM) takes the two factors of time value of money and market risk into account for
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All CFA Institute members and candidates are required to comply with the Code and Standards Basic structure for enforcing the Code and Standards The CFA Institute Bylaws primary principles Based on two Fair process to member and candidate Confidentiality of proceedings Rules of Procedure Maintains oversight and responsibility The CFA Institute Board of Governors Through the Disciplinary Review Committee (DRC) Is responsible for the enforcement of the Code and Standards Conducts professional
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CT1 – P C – 09 Combined Materials Pack ActEd Study Materials: 2009 Examinations Subject CT1 Contents Study Guide for the 2009 exams Course Notes Question and Answer Bank Series X Assignments* *Note: The Series X Assignment Solutions should also be supplied with this pack unless you chose not to receive them with your study material. If you think that any pages are missing from this pack, please contact ActEd’s admin team by email at ActEd@bpp.com or by phone on 01235 550005. How to
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the profits himself so there is incentive to work harder. The downside is that it has unlimited liability (where if the business goes bankrupt, everything the owner owns can be taken by creditors). There is also difficulty in raising large sums of money as you are a single person. Since the business profits are also the owner’s profits, there is no distinct line between personal income and business income. The business will only generally last as long as the owner is alive or wants to run it. Partnerships
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Time value of money problems 1) An annuity makes ten annual payments of $1000 each, starting 3 years from now. What is the present value if the discount rate is 10%? 2) If the discount rate is 8% per year, what is the present value of $1500 received every third year forever (the first payment occurs three years from now)? 3) A perpetuity makes payments of $500 every second year, with the first payment coming one year from today. If the discount rate is 5%, what is the present value of the perpetuity
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------------------------------------------------- PRESENT VALUE Modular Learning Outcomes Upon successful completion of this module, the student will be able to satisfy the following outcomes: * Case * Explain the concept of present value. * Calculate the present value of a future stream of income. * Describe the determinants of the discount factor. * Explain the determinants of present value. * SLP * Explain the concept of present value. * Describe the determinants
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capital Discuss how likely technological advances over the next 20 years will change the way businesses manage working capital. Provide specific examples to support your response. Explain the concept of time value of money and how this can be applied in your life. Time Value of Money (TVM) is an important concept in financial management and can be used to make comparison when it comes to investment alternatives and to solve the problems involving mortgages, loans, leases, savings and annuities
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quarterly, paying a whopping 8% annual interest over a 5-year period. With my 5-year budget, I will save $2,500 each quarter. To evaluate which option will benefit the business the most, I will evaluate both annuity options by calculating the future value of each option and explain how the investment will help me to carry out my goals. After further review of the maintenance log, I now know that I need to also replace a fence post molding machine that costs $45,000. I will probably need to purchase
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sheet Generate a personal income and expense statement. Develop a good record-keeping system and use ratios to evaluate personal financial statements. • Construct a cash budget and use it to monitor and control spending. • Apply time vale of money concepts to put a monetary value on financial goals. • • • • © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Mapping Out Your Financial Future Financial
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