Week 7 Overview

Week 7: Overview

Solving Time Value of Money Problems

Welcome to the seventh week of BUSN 5200: Basic Finance for Managers. This week we continue the study of the Time Value of Money by taking a look at the different kinds of time value of money problems commonly encountered and practicing solving them.

Common Time Value of Money Problems
Here is a sampling of the types of problems commonly encountered that can be solved by applying the techniques you were introduced to last week:

  • Solving for the present and future value of lump sums
  • Solving for the present and future value of annuities
  • Solving for the rates of return of lump sums
  • Dealing with compounding periods other than a year
  • Working with annuities when the payments occur at the beginning of the year
  • Solving for the rates of return of annuities
  • Solving for loan payments
  • Dealing with perpetuities
  • Uneven cash flow streams

You learned how to solve for the present value and the future value of lump sums and annuities, and how to calculate the rate of return for lump sums last week. This week we will practice solving the remaining types of problems in the list.

This week we will also continue our discussion of the Case Study of McDonald's Corporation. This week you will finalize your ratio analysis and work on the Summary and Conclusion section of your report.

Objectives

By the end of this week, students will be expected to:

  • Solve commonly encountered time value of money problems