1. Time Value of Money AGEC 489-689 Spring 2010

2. Page 60 in booklet

3. 2009 2010 2011 2012 2013 ……. 2019 Time Value of Money… Assume it is the year 2009 and you have been given the choice of a single payment of $500 paid to you ten years from now (2019) or a payment of $300 today. Which would you choose?

4. Page 60 in booklet

5. Present Value Interest Factor (PIF) Table PIF r,n = (1 + r) -n

6. Page 61 in booklet I would take the $300 today since it has a higher present value, given my discount rate of 6%, than $500 ten years from now.

7. Present Value Interest Factor (PIF) Table PIF r,n = (1 + r) -n

8. Page 61 in booklet

9. EPIF r,n = [1 – (1 / (1+ r) n )] / r Equal Payment Present Value Interest Factor (EPIF) Table

10. EPIF r,n = [1 – (1 / (1+ r) n )] / r Equal Payment Present Value Interest Factor (EPIF) Table

11. Pages 61-62 in booklet

12. Present Value Interest Factor (PIF) Table PIF r,n = (1 + r) -n

13. Present Value Interest Factor (PIF) Table PIF r,n = (1 + r) -n

14. Page 62 in booklet

15. Page 63 in booklet

16. Pages 63-64 in booklet

17. Page 64 in booklet

18. EPIF r,n = [1 – (1 / (1+ r) n )] / r Equal Payment Present Value Interest Factor (EPIF) Table

19. Page 64-65 in booklet

20. EPIF r,n = [1 – (1 / (1+ r) n )] / r Equal Payment Present Value Interest Factor (EPIF) Table

21. Page 65 in booklet

22. Page 65-66 in booklet Know equations 40, 44 and 45

23. Let’s Work Some Problems