eBook - ePub
About this book
Foundations of finance in 6 laminated pages for business students and professionals alike. Quick access to the essentials provides an opportunity for review throughout an entire course, daily, weekly or before exams. Review often, after a lecture or textbook chapter to step back and see how that knowledge fits into the big picture. Also a great reference tool for any non-finance related business professionals to understand what keeps the company running and profitable. Suggested uses:
o Students – with the least expensive study tool you will find - review, review, review… and your scores will increase
o Professors – use this guide as a finance course syllabus to offer more to your students at a price that beats any supplemental material
o Business – handy overview of the important aspects of finance for yourself or employees to better understand the business
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Yes, you can access Finance by in PDF and/or ePUB format, as well as other popular books in Business & Business General. We have over one million books available in our catalogue for you to explore.
Information
Time Value Of Money
- A dollar is worth more now than that same dollar will be worth in the future
- Inflation reduces the purchasing power of the dollar
- Because of the uncertainty surrounding the receipt of the dollar, an agreement to receive it sooner rather than later will increase the value
- Time values involve the importance of opportunity costs. A dollar today is worth more than a dollar in one year because the dollar today can be productively invested and will become more than a dollar in one year
- Time values of money calculations are used in capital budgeting, real estate planning, investing, banking, insurance, retirement planning, and other areas of personal finance
- Compounding
- The process of determining the future value of a present sum
- For multiple periods, compounding results in interest producing more interest (interest “giving birth” to more interest)
- Discounting
- The opposite of compounding, it is the process of determining the present value of a future sum
The current worth calculated for a future lump sum (a single amount received in the future), a stream of equal cash flows (annuities), and a stream of unequal cash flows
EX: If you wanted to invest a specific amount now to reach some future dollar goal, you would use the present value of a single amount formula. However, if you want to know the present value of a series of equal cash flows per year for a definite number of years, you would use either the ordinary annuity formula or the annuity due formula, depending on whether the cash flows occur at the beginning or the end of each period
- Single amount: Present value (PV) of a lump sum (FVn) given at the end of n periods at an interest rate of r%
Discounted once per period: PV =
FVn |
(1 + r)n |
Discounted “m” times per period: PV =
FVn | |||||
|
Discounted continuously: PV = FVn × e–rn, where: e is the base of natural logarithms
Annuities - Ordinary Annuity: Present value of an ordinary annuity (PVA) of PMT per period for n periods at r% per period:
PVA =
=
n |
Σ |
t=1 |
PMT |
(1 + r)n |
PMT |
r |
1 − | 1 | ||
(1 − r)n |
Cash flows occur at the end of each period
EX: If you were expecting to receive $500 at the end of each year for the next 10 years, that would be an ordinary annuity
- Annuity Due: Present value of an annuity due (PVD) of n cash flows (PMT) at r% per per...
Table of contents
- Corporation
- Financial Statements
- Financial Ratios
- Working Capital
- Short-Term Financing
- Time Value Of Money
- Risk & Return
- Financial Market
- Valuation
- Capital Budgeting
- Cost Of Capital
- Capital Structure Theories
- Break-Even & Leverage
- Financial Planning & Forecasting
- Leasing
- Working Capital Management
- Cash Cycle
- Cash Collection Time
- Dividends
- Accounts Receivable (A/R)
- Inventory
- International Finance