Foundations and Applications of the Time Value of Money

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.

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.