taiwan财务管理_lecture3(ch3)basw.pptx

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1、The McGraw-Hill Companies,Inc.,20013-1Irwin/McGraw-Hill Irwin/McGraw-HillChapter 3Fundamentals of Corporate FinanceThird EditionThe Time Value of MoneyBrealey Myers Marcusslides by Matthew WillIrwin/McGraw-Hill The McGraw-Hill Companies,Inc.,2001The McGraw-Hill Companies,Inc.,20013-2Irwin/McGraw-Hil

2、lTopics CoveredFuture ValuesPresent ValuesMultiple Cash FlowsPerpetuities and AnnuitiesInflation&Time ValueEffective Annual Interest RateThe McGraw-Hill Companies,Inc.,20013-3Irwin/McGraw-HillFuture ValuesFuture Value-Amount to which an investment will grow after earning interest.Compound Interest-I

3、nterest earned on interest.Simple Interest-Interest earned only on the original investment.The McGraw-Hill Companies,Inc.,20013-4Irwin/McGraw-HillFuture ValuesFuture Value of$100=FVThe McGraw-Hill Companies,Inc.,20013-5Irwin/McGraw-HillFuture ValuesExample-FVWhat is the future value of$100 if intere

4、st is compounded annually at a rate of 6%for five years?The McGraw-Hill Companies,Inc.,20013-6Irwin/McGraw-HillFuture ValuesExample-FVWhat is the future value of$100 if interest is compounded annually at a rate of 6%for five years?The McGraw-Hill Companies,Inc.,20013-7Irwin/McGraw-HillFuture Values

5、with CompoundingInterest RatesThe McGraw-Hill Companies,Inc.,20013-8Irwin/McGraw-HillManhattan Island SalePeter Minuit bought Manhattan Island for$24 in 1626.Was this a good deal?To answer,determine$24 is worth in the year 2000,compounded at 8%.FYI-The value of Manhattan Island land is FYI-The value

6、 of Manhattan Island land is well below this figure.well below this figure.The McGraw-Hill Companies,Inc.,20013-9Irwin/McGraw-HillPresent ValuesPresent ValueValue today of a future cash flow.Discount RateInterest rate used to compute present values of future cash flows.Discount FactorPresent value o

7、f a$1 future payment.The McGraw-Hill Companies,Inc.,20013-10Irwin/McGraw-HillPresent ValuesThe McGraw-Hill Companies,Inc.,20013-11Irwin/McGraw-HillPresent ValuesExampleYou just bought a new computer for$3,000.The payment terms are 2 years same as cash.If you can earn 8%on your money,how much money s

8、hould you set aside today in order to make the payment when due in two years?The McGraw-Hill Companies,Inc.,20013-12Irwin/McGraw-HillPresent ValuesDiscount Factor=DF=PV of$1Discount Factors can be used to compute the present value of any cash flow.The McGraw-Hill Companies,Inc.,20013-13Irwin/McGraw-

9、HillThe PV formula has many applications.Given any variables in the equation,you can solve for the remaining variable.Time Value of Money(applications)The McGraw-Hill Companies,Inc.,20013-14Irwin/McGraw-HillValue of Free CreditImplied Interest RatesInternal Rate of ReturnTime necessary to accumulate

10、 fundsTime Value of Money(applications)The McGraw-Hill Companies,Inc.,20013-15Irwin/McGraw-HillPV of Multiple Cash FlowsExampleYour auto dealer gives you the choice to pay$15,500 cash now,or make three payments:$8,000 now and$4,000 at the end of the following two years.If your cost of money is 8%,wh

11、ich do you prefer?The McGraw-Hill Companies,Inc.,20013-16Irwin/McGraw-HillPV of Multiple Cash FlowsPVs can be added together to evaluate multiple cash flows.The McGraw-Hill Companies,Inc.,20013-17Irwin/McGraw-HillPerpetuities&AnnuitiesPerpetuity A stream of level cash payments that never ends.Annuit

12、y Equally spaced level stream of cash flows for a limited period of time.The McGraw-Hill Companies,Inc.,20013-18Irwin/McGraw-HillPerpetuities&AnnuitiesPV of Perpetuity FormulaC=cash payment r=interest rate The McGraw-Hill Companies,Inc.,20013-19Irwin/McGraw-HillPerpetuities&AnnuitiesExample-Perpetui

13、tyIn order to create an endowment,which pays$100,000 per year,forever,how much money must be set aside today in the rate of interest is 10%?The McGraw-Hill Companies,Inc.,20013-20Irwin/McGraw-HillPerpetuities&AnnuitiesExample-continuedIf the first perpetuity payment will not be received until three

14、years from today,how much money needs to be set aside today?The McGraw-Hill Companies,Inc.,20013-21Irwin/McGraw-HillPerpetuities&AnnuitiesPV of Annuity FormulaC=cash payment r=interest rate t=Number of years cash payment is receivedThe McGraw-Hill Companies,Inc.,20013-22Irwin/McGraw-HillPerpetuities

15、&AnnuitiesPV Annuity Factor(PV AF)-The present value of$1 a year for each of t years.The McGraw-Hill Companies,Inc.,20013-23Irwin/McGraw-HillPerpetuities&AnnuitiesExample-AnnuityYou are purchasing a car.You are scheduled to make 3 annual installments of$4,000 per year.Given a rate of interest of 10%

16、,what is the price you are paying for the car(i.e.what is the PV)?The McGraw-Hill Companies,Inc.,20013-24Irwin/McGraw-HillPerpetuities&AnnuitiesApplicationsValue of paymentsImplied interest rate for an annuityCalculation of periodic payments Mortgage paymentAnnual income from an investment payoutFut

17、ure Value of annual paymentsThe McGraw-Hill Companies,Inc.,20013-25Irwin/McGraw-HillPerpetuities&AnnuitiesExample-Future Value of annual paymentsYou plan to save$4,000 every year for 20 years and then retire.Given a 10%rate of interest,what will be the FV of your retirement account?The McGraw-Hill C

18、ompanies,Inc.,20013-26Irwin/McGraw-HillInflationInflation-Rate at which prices as a whole are increasing.Nominal Interest Rate-Rate at which money invested grows.Real Interest Rate-Rate at which the purchasing power of an investment increases.The McGraw-Hill Companies,Inc.,20013-27Irwin/McGraw-HillI

19、nflationapproximation formulaThe McGraw-Hill Companies,Inc.,20013-28Irwin/McGraw-HillInflationExampleIf the interest rate on one year govt.bonds is 5.0%and the inflation rate is 2.2%,what is the real interest rate?SavingsBondThe McGraw-Hill Companies,Inc.,20013-29Irwin/McGraw-HillEffective Interest

20、RatesAnnual Percentage Rate-Interest rate that is annualized using simple interest.Effective Annual Interest Rate-Interest rate that is annualized using compound interest.The McGraw-Hill Companies,Inc.,20013-30Irwin/McGraw-HillEffective Interest RatesexampleGiven a monthly rate of 1%,what is the Effective Annual Rate(EAR)?What is the Annual Percentage Rate(APR)?The McGraw-Hill Companies,Inc.,20013-31Irwin/McGraw-Hill基本財務數學摘要 現值與未來值 年金（Annuity）的未來值和現值 貸款常數（mortgage constant）與沉入基金因子（sinking fund factor）