Synopses & Reviews
Understanding financial transactionswhether involving investing, borrowing, or lendingrequires an understanding of the time value of money (TVM), as well as the financial mathematics that go along with it. And while TVM is an essential aspect of finance, there aren't many resources that take the time to fully explain it.
In this book, the experienced author team of Pamela Peterson Drake and Frank Fabozzi fully expand upon the type of TVM concepts usually presented as part of an overview given in other general finance books. Throughout these pages, various TVM concepts and principles are discussed, with the authors offering examples in each chapter to reinforce the tools and techniques covered. Problems and detailed solutionsdemonstrated using two different financial calculators, as well as Excelare also provided at the end of each chapter, while glossary terms are included in an appendix, to familiarize you with basic terms.
Divided into two comprehensive partsThe Basics of the Time Value of Money and A Few Applicationsthis comprehensive guide can help you analyze almost any financial transaction and evaluate cash flows to determine values at different points in time or returns on investments. Written with both the aspiring and experienced financial professional in mind, Foundations and Applications of the Time Value of Money:
- Deals with the compounding and discounting of lump sumstranslating single values through time
Shows how valuing series of cash flows is a simple extension of discounting or compounding lump sums
Demonstrates how to calculate the annual percentage rate, the effective annual rate, and the internal rate of return for financial transactions
Looks at loans and how they may be amortized
Focuses on deferred annuitieswhich are typically used within the retirement arenaand other "saving-for-future-spending" scenarios in which there is more than one withdrawal of funds in the future
Addresses the valuation of stocks and bonds using TVM mathematics
Rounding out this detailed discussion, Peterson Drake and Fabozzi examine the applications of the TVM mathematics with regard to: evaluating whether to get an MBA, deciding whether to lease or buy a car, and whether gold is a good investment. And while this is not a personal finance book, the authors chose examples that might interest you in immediately applying the techniques outlined here.
Making more informed financial decisions relies on a firm grasp of the time value of money. This book has the insights and advice needed to achieve such a goal.
Synopsis
In the "Time Value of Money," authors Peterson Drake and Fabozzi expand upon the type of time value of money concepts usually presented as part of overviews given in other general finance books. The basic foundations, concepts, and theories are presented, and then the authors offer examples throughout that serve to reinforce the tools and techniques discussed, and engage readers with consumer finance topics. Problems and detailed solutions (demonstrated using two different financial calculators, as well as Excel) are also provided at the end of each chapter while definitions are called out throughout to introduce terms.
Synopsis
In this latest collaboration from Pamela Peterson Drake and Frank Fabozzi, the authors provide comprehensive coverage of the time value of money and fully expand upon related concepts that are usually presented as part of an overview in other general finance books.
Chapter by chapter, various time value of money concepts and principles are discussed and many examples are used to reinforce the tools and techniques covered. Problems and detailed solutionsdemonstrated using two different financial calculators, as well as Excelare also provided at the end of each chapter, while glossary terms are included in an appendix, to familiarize you with basic terms.
Divided into two comprehensive parts, this reliable resource:
Understanding the time value of money is essential, and with this reliable resource as your guide, you'll quickly gain a firm grasp of its many aspects and real-world applications.
Synopsis
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.
About the Author
PAMELA PETERSON DRAKE, PhD, CFA, is the J. Gray Ferguson Professor of Finance and Department Head of Finance and Business Law at James Madison University. Prior to joining James Madison University, she was an associate dean and professor of finance at Florida Atlantic University, and, previous to that, a professor at Florida State University.
FRANK J. FABOZZI, PhD, CFA, CPA, is Professor in the Practice of Finance and Becton Fellow at the Yale School of Management, Editor of the Journal of Portfolio Management, and Associate Editor of the Journal of Structured Finance and the Journal of Fixed Income.
Table of Contents
Preface.
About The Authors.
Introduction.
Part 1: The Basics Of The Time Value Of Money.
Chapter 1: The Value Of Compounding.
Compounding.
Calculator And Spreadsheet Solutions.
Frequency Of Compounding.
Chapter 2: Don't Discount Discounting.
Discounting.
Discounting More Than On Future Value.
Determining The Number Of Compounding Periods.
Chapter 3: Cash Happens.
Valuing A Stream Of Future Cash Flows.
Valuing A Perpetuity.
Annuities.
Chapter 4: Yielding For Yields.
Annualized Rates Of Interest.
Determining The Unknown Interest Rate.
Rules.
Part 2: A Few Applications.
Chapter 5: Loans: To Amortize Or Not To Amortize.
Amortizing A Loan.
Interest Rates On Loans.
Determining The Number Of Periods.
Variations On The Theme.
Chapter 6: Saving To Spend.
Valuing A Deferred Annuity.
Annuities With Annuities.
A Bit Of Realism.
Chapter 7: Values Tied To Bonds.
Bond Basics.
Calculating The Yield To Maturity.
Issues.
Chapter 8: Taking Stock.
What's In A Value? The Basics Of Stock Valuation.
Returns On Stocks.
Chapter 9: A Capital Idea.
The Net Present Value.
The Profitability Index.
The Internal Rate Of Return.
Chapter 10: Fact Or Fiction.
Fact Or Fiction: It Pays To Get An MBA.
Fact Or Fiction: Leasing A Car Accosts Less Than Buying A Car.
Fact Or Fiction: Gold Has Always Been A Good Investment.
Appendices.
Appendix A: Using Financial Calculators.
Preparing The Calculator.
The Basics.
Financial Functions.
Tips.
Troubleshooting.
Appendix B: Using Spreadsheets For Financial Calculations.
The Basics.
Time Value Of Money Functions.
Cash Flow Functions.
Other Useful Functions For Financial Mathematics.
Appendix C: Formulas.
Appendix D: Glossary.
Appendix E: Solutions To End-Of-Chapter Problems.
Index.