Specialized Summary The goal of the textbook is to provide students with an enduring understanding of the basic tools and fundamental principles upon which finance is based. Financial Management is a total learning package that reflects the vitality of an ever-expanding discipline, building on the foundations of economics and accounting. Adapted for the Australian market, students are presented with a cohesive, inter-related subject that they can use when approaching future, as yet unknown, problems. Building on the strengths of the previous edition, the Eighth Edition sees consolidation and refining of content, creating a modern teaching approach. These principles are woven throughout the book, forming a rationalised, coherent, integrated and intuitive problem-solving approach.

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You can contact me at smcollector gmail. The test bank contains practice exam and quiz questions and answers. Martin, Arthur J. The basic premise of time value of money problems is that time impacts the value of a dollar.

That is, a dollar received today is worth more than one received in the future. The principles of time value of money are used in a variety of applications in finance, including capital budgeting, capital structure, cost of capital, and working capital management decisions. This chapter explores time value of money concepts as they apply to a lump sum or single cash flow. Future value is the value of a sum of money compounded at a given interest rate for a specific period of time.

Present value is the current value of a sum of money to be received at a specified time in the future, given a stated rate of interest. A timeline identifies the timing and amount of a stream of payments, along with the interest rate it earns. Timelines are the first step in visualizing and solving time value of money problems. Simple versus Compound Interest 1. Simple interest is the interest earned on the principal amount.

Compound interest is the interest earned on both the initial principal amount and on reinvested interest from previous periods. Future Value is the value of a current sum of money at a time in the future, given a specified compound interest rate.

The future value of an investment grows with the number of periods it is compounded; the longer the time, the larger the future value. The future value increases with the level of the rate of interest; the higher the interest rate, the larger the future value.

Compounding principles can be applied to things other than money. Compounding applies to anything that grows. Examples include sales, population, inflation rates, etc. Present value is the value today of a future cash flow. The process of discounting involves determining the present value of an expected future cash flow, given a specified rate of interest. Present value decreases as the number of periods until the payment is received is increased.

Present value decreases as the interest rate increases. Present value techniques can be used to solve problems for either the number of periods or interest rate to reach a future value. Continuous Compounding occurs when the time intervals between when interest is paid is infinitely small. Construct cash flow timelines to organize your analysis of time value of money problems Understand compounding and calculate the future value of cash flows using mathematical formulas, a financial calculator, and an Excel spreadsheet.

Understand discounting and calculate the present value of cash flows using mathematical formulas, a financial calculator, and an Excel spreadsheet. Understand how interest rates are quoted and know how to make them comparable. Introduce Future Value by looking at a variety of examples: a.

Population growth c. Salary over a lifetime d. Prices given a constant inflation rate 2. Use the Rule of 72 to explore how the growth rate significantly affects the time for a quantity to double. Vary the growth rate to see how doubling is affected for such examples as population, sales, prices, etc.

What is the relationship between present value and future value? Explain what is meant by continuous compounding? How can compounding occur continuously? How would you determine which is the best job to take if you assume you will stay in this position for 5 years?

At what growth rate would you be indifferent between the two positions?



Fezahn About the Author s. Access codes may or may not work. Utilizing five key principles, the13th Edition provides an approachable introduction to financial decision-making, weaving in real world issues to demonstrate the practical applications of critical fi Item may show signs of shelf wear. Get the picture and develop a fundamental understanding of finance. John and Sally have two wonderful sons and two beautiful grandsons who visit them often on their ranch in Crawford, Texas, titmann they raise Brangus cattle and miniature donkeys. Keown, John D Martin Good. NEW — Financial Management: Getting Started — Principles of Finance Chapter 2: Tying it all together: For the introductory finance titjan corporate finance or financial management—required at all undergraduate business schools.


Financial Management: Principles and Applications, 11th Edition



Financial Management



ISBN 13: 9780132340359


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