The simple technique to solve this problem using the calculator is shown in Table 8.7. A share of preferred stock of Shaw Inc., pays an annual $2.00 dividend, and the required rate of return that investors in this stock expect is 7%. We’ll begin with the constant perpetuity that we used to illustrate the constant perpetuity formula. While understanding and mastery of the use of time value of money equations are part of a solid foundation in the study of business and personal finance, calculators are rapid and efficient. This section will explore examples of both, beginning with financial calculators. Since the 1980s, many convenient and inexpensive tools have become available to simplify business and personal calculations, including personal computers with financial applications and handheld/desktop or online calculators with many of the functions we’ve studied already. Solving Time Value of Money Problems Using a Financial Calculator Schedule the amortization of a loan repayment.Calculate an effective rate of interest.Use a financial calculator and Excel to solve annuity problems.Use a financial calculator and Excel to solve perpetuity problems. By the end of this section, you will be able to:
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