Comprehensive coverage of the time value of money In this book, authors Pamela Peterson Drake and Frank Fabozzi fully expand upon the type of time value of money (TVM) concepts usually presented as part of overviews given in other general finance books. Various TVM concepts and theories are discussed, with the authors offering many examples throughout each chapter that serve to reinforce the tools and techniques covered. Problems and detailed solutions-demonstrated using two different financial calculators, as well as Excel-are also provided at the end of each chapter, while glossary terms are provided in an appendix to familiarize you with basic terms. Provides the basic foundations of the time value of money Covers issues ranging from an introduction of financial mathematics to calculating present/future values and understanding loan amortization Contains problem/solution sets throughout, so you can test your knowledge of the topics discussed Understanding the time value of money is essential, and this reliable resource will help you gain a firm grasp of its many aspects and its real-world applications.

Comprehensive coverage of the time value of moneyIn this book, authors Pamela Peterson Drake and Frank Fabozzifully expand upon the type of time value of money (TVM) conceptsusually presented as part of overviews given in other generalfinance books. Various TVM concepts and theories are discussedwith the authors offering many examples throughout each chapterthat serve to reinforce the tools and techniques covered. Problemsand detailed solutions-demonstrated using two different financialcalculators, as well as Excel-are also provided at the end of eachchapter, while glossary terms are provided in an appendix tofamiliarize you with basic terms.* Provides the basic foundations of the time value of money* Covers issues ranging from an introduction of financialmathematics to calculating present/future values and understandingloan amortization* Contains problem/solution sets throughout, so you can test yourknowledge of the topics discussedUnderstanding the time value of money is essential, and thisreliable resource will help you gain a firm grasp of its manyaspects and its real-world applications.

Preface ixAbout the Authors xiIntroduction xiiiPart One The Basics of the Time Value of Money 1Chapter 1 The Value of Compounding 3Compounding 7Calculator and Spreadsheet Solutions 11Frequency of Compounding 14Summary 20"Try It" Solutions 21Problems 22Chapter 2 Don't Discount Discounting 23Discounting 23Discounting More Than One Future Value 31Determining the Number of Compounding Periods 35Summary 38"Try It" Solutions 38Problems 39Chapter 3 Cash Happens 41Valuing a Stream of Future Cash Flows 42Valuing a Perpetuity 51Annuities 54Summary 61"Try It" Solutions 62Problems 62Chapter 4 Yielding for Yields 65Annualized Rates of Interest 65Determining the Unknown Interest Rate 77Rules 88Summary 89"Try It" Solutions 90Problems 90Part Two A Few Applications 93Chapter 5 Loans 95Loan Amortization 95Interest Rates on Loans 104Determining the Number of Periods 108Variations on the Theme 109Summary 114"Try It" Solutions 114Problems 115Chapter 6 Saving to Spend 119Valuing a Deferred Annuity 119Annuities with Annuities 126A Bit of Realism 135Summary 138"Try It" Solutions 139Problems 139Chapter 7 Values Tied to Bonds 141Bond Basics 142Calculating the Yield to Maturity 154Issues 157Interest Rates 163Yield Curves 164Summary 169"Try It" Solutions 170Problems 171Chapter 8 Taking Stock 173What's in a Value? The Basics of Stock Valuation 174Return on Stocks 187Summary 192"Try It" Solutions 193Problems 195Chapter 9 A Capital Idea 197The Net Present Value 198The Profitability Index 201The Internal Rate of Return 204Summary 214"Try It" Solutions 215Problems 216Chapter 10 Finance Fact or Fiction? 219Fact or Fiction: It Pays to Get an MBA 219Fact or Fiction: Leasing a Car Costs Less than Buying a Car 222Fact or Fiction: Gold Has Always Been a Good Investment 225Summary 230Appendix A Using Financial Calculators 231Preparing the Calculator 232The Basics 235Financial Functions 237Tips 242Troubleshooting Problems 243Appendix B Using Spreadsheets in Financial Calculations 247The Basics 247Time Value of Money Functions 248Cash Flow Functions 252Other Useful Functions for Financial Mathematics 253Appendix C Formulas 255Appendix D Glossary 261Appendix E Solutions to End-of-Chapter Problems 265Index 281