Thank you so much for taking the time to make this video and explain each step thoroughly! Definitely helped me solidify this concept for my finance class! :)
What if you're calculating the FV of these uneven cash flows with a different compounding frequency? What if your interest rate was still 10%, but compounded semiannually?
Semi-annual compounding means that the interest rate will be compounded every 6 months. So in 1 year interest rate will be compounded twice. In this case you get a 10% annual interest and the number of periods are 3 years. Since the compounding frequency is semi-annual you will have to adjust your annual interest rate to semi-annual as well as the number of periods. 10% / 2 = 5% semi annual int.rate & 3 years * 2 = 6 compounding periods.
A saver deposits the following amounts in an account paying a stated annual rate of 4%, compounded semiannually: Year End of Year Deposits ($) 1 --> 4,000 2 --> 8,000 3 --> 7,000 4 --> 10,000 Anyone can help with the different step to compute the future value of the total saver deposit end of year 4?
Step 1: cf0=0 cf1=0 cf2=4000 cf3=0 cf4=8000 cf5=0 cf6=7000 cf7=0 cf8=10000 hit NPV, enter I=2 CPT NPV (you should get 25,986.14) Step 2 use this NPV as PV: PV = 25,986.14 PMT=0 N=8 I/Y=2 CPT FV now you should get 30,446.91 Hope this helps. Since it's semi annual, you can see it as total of 8 payment, where mid-year is $0 payment.
Thank you so much for taking the time to make this video and explain each step thoroughly! Definitely helped me solidify this concept for my finance class! :)
You're a hell of a teacher, thank you sir! I am feeling much more confident for my final exam on Monday
Thank you pdaves!! You saved my life and my financial management course!!
Awesome video thanks !! My finance textbook didn't even dive into this.
Same it is a damn nightmare
So easy!!! Thank you for being so detailed, so quickly!!
This is so helpful ! Thanks a lot. Seems like my Schweser textbook has completely ignored this.
Thank you kind sir! It took me a while to find this video, but happy I did :)
Thanks for teaching you are a genius
Thank you so much for your helpful instruction!
So helpful, you are the greatest
Such a simple method, I love it!
What if you're calculating the FV of these uneven cash flows with a different compounding frequency? What if your interest rate was still 10%, but compounded semiannually?
Semi-annual compounding means that the interest rate will be compounded every 6 months. So in 1 year interest rate will be compounded twice.
In this case you get a 10% annual interest and the number of periods are 3 years. Since the compounding frequency is semi-annual you will have to adjust your annual interest rate to semi-annual as well as the number of periods.
10% / 2 = 5% semi annual int.rate & 3 years * 2 = 6 compounding periods.
Thanks sir. You made my life a lot easier
Honestly very helpful. Thank you!
Hi Dave! Can you please tell me if you can use this NPV method if there was semiannual compounding?
So we don't have to make the initial investment of $40 negative? I saw this for similar calculations but am not sure when to make CF0 negative
Very Helpful!!
Exactly what I needed thank you!
Shouldn’t CF0 be a negative 40 instead of a positive one since it is the initial investment?
just dont forget to put a minus sign on the PV before computing - therefore not attaining a negative answer
Excellent
great video
why you dont put on BGN mode? Isn't that start from O so it is Annuity Due ?
Awesome. Really helpful!!
Thank you so muchhhhhhh.
can you tell me the way to download that calculation please
thank you so much the video is very useful😘
Thank you
thanks (Y) very insightful
Thank you :)
Thanks for the help :D
THANK YOU!
Ummm, why not just do FV = NPV*(1.1)^3 ? I.E. PV accrues 3 years of interest at 10% to get FV.
Many thanks sir
Is this the same as a "MIXED STREAM"????
yes
A saver deposits the following amounts in an account paying a stated annual rate of 4%, compounded semiannually:
Year End of Year Deposits ($)
1 --> 4,000
2 --> 8,000
3 --> 7,000
4 --> 10,000
Anyone can help with the different step to compute the future value of the total saver deposit end of year 4?
Step 1:
cf0=0
cf1=0
cf2=4000
cf3=0
cf4=8000
cf5=0
cf6=7000
cf7=0
cf8=10000
hit NPV, enter I=2
CPT NPV (you should get 25,986.14)
Step 2
use this NPV as PV:
PV = 25,986.14
PMT=0
N=8
I/Y=2
CPT FV
now you should get 30,446.91
Hope this helps.
Since it's semi annual, you can see it as total of 8 payment, where mid-year is $0 payment.