Course: Introduction to Finance, Section: Chapter 4

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  WELCOME_OBA3105_INTRODUCTION TO FINANCE_BBAIB_ODL
  
  This is Introduction to Finance OBA 3105, a core subject in Bachelor of Business Administration in International Business (BBAIB)_ODL
  
  DESCRIPTION OF THE COURSE
  
  This module is designed to provide students with a strong foundation in finance that allows them to understand and apply the concepts in the world of finance as well as to focus their attention to certain issues they can further explore. which applicable for both in personal and managerial finance. At the end of the course, students can recognize relationship between finance and other business disciplines, as well as to be able to use synergy of those disciplines in decision making.
  
  AIM OF THE COURSE
  The overall aim of the module is to give students an exposure to the basic business finance theory both quantitative and qualitative with some simple applications.
  Specific topics covered will include time value of money, the role of the financial markets in company financing, the nature and role of financial instruments, sources of financial information, evaluation of proposed capital expenditure, and cost of capital and the returns to providers of finance.
  This is an introduction to the fundamental concepts of business finance. The students will be exposed to the time value of money concept, the assets evaluation, the capital budgeting, the capital structure, and the cost of capital, and working capital management.
  COURSE LEARNING OUTCOME
  At the end of the course the students will be able to:
  Discuss the principles of finance and the roles of financial market that underline the finance discipline.(C2, PLO1)
  Demonstrate the concept of time value of money and various decision making techniques in financial planning. (C3,PLO8)
  Calculate the value of bonds and stock in a market place (C3,PLO8)
  SUPPORT AND CONTACT DETAILS
  Name: Mimi Suriaty Binti Haji Abdul Rani
  Email : msuriaty@nilai.edu.my
  Consultation Hours: Wednesday (08:00 am – 10:00 am) and Thursday (08:00 am – 10:00 am

Chapter 4 – Time Value of Money_Part 1
CHAPTER 4: TIME VALUE OF MONEY
WEEK 5 (Lecture) and (Tutorial)
SYNOPSIS / OVERVIEW
Chapter 4 introduces the concept of time value of money and explains how to determine the value of money today vs. tomorrow by using finance tools to determine present and future values. Also, in Lesson 4 exposes the concept of interest rates and how to apply them when multiple periods are considered.
Here are the main topics to be covered in Chapter 4 (Week 5):
- Future Value and Compounding
- Present Value and Discounting
- More on Present and Future Values
- Implied interest rate
- Number of periods
LEARNING OUTCOMES
By the end of this lesson, student should be able to:
- Calculate the future value of an investment made today.
- Calculate the present value of cash to be received at some future date.
- Calculate the return on an investment.
- Calculate the number of periods that equates a present value and a future value given an interest rate.
Be able to solve time value of money problems using:
- Formulas
- Financial Calculator
REQUIRED READINGS
Chapter 4 : Time Value of Money
Titman, Keown, A. J. and Martin, J.D. (2018). Financial Management, (13th ed). Principles and Applications, Pearson Education.
- OBA3105_INTRODUCTION TO FINANCE_NOTE 4(a)_CHAPTER 4 File
  KEY CONCEPTS AND SKILLS
  
  Be able to compute:
  Calculate the future value of an investment made today.
  Calculate the present value of cash to be received at some future date.
  Calculate the return on an investment.
  Calculate the number of periods that equates a present value and a future value given an interest rate.
  Be able to solve time value of money problems using:
  
  Formulas
  Financial Calculator
- OBA3105_INTRODUCTION TO FINANCE_VIDEO 4(a)_CHAPTER 4 File
  CHAPTER 4 : TIME VALUE OF MONEY PART 1
- SELF CHECK 4.1 (a) : Online Discussion Forum
  
  View
  
  Once completed view the video. Let's discuss!
  Tutorial (3) _Present Value, Future Value, Discounted rate and Number of Periods calculations.
  ▪ Details: 10 questions
  ▪ Duration of submission: 1 week
  
  Question 1:
  
  You have deposited RM1000 today and the bank offers interest rate a 7% interest rate per annum. If you plan to save your money for 3 years, determine the future values in Years 1, 2 and 3.
  
  Question 2:
  
  Alvin has won a jackpot which pays her RM5, 000 per year for 3 years, beginning one year from today. Alvin wants to know the present value of the jackpot using a discount rate of 7%.
  
  Question 3:
  
  Remy will retire in 20 years. This year he wants to fund an amount of $15,000 to become available in 20 years. How much does he have to deposit into a pension plan earning 7% annually?
  
  Question 4:
  
  James needed a $1191 in 3 years to be off some debt. How much should James put in a saving account that earns 6% today?
  
  Question 5:
  
  Suppose we invest $200,000 in an investment that pays 4% interest per year, compounded quarterly. What will be the future value of this investment at the end of 10 years?
  
  Question 6:
  
  Suppose that the goal is to have $75,000 in an account by the end of four years. And suppose that interest on this account is paid at a rate of 5% per year, compounded semi-annually. How much must be deposited in the account today to reach this goal?
  
  Question 7:
  
  Consider the growth rate of dividends for ABC Corp. ABC Corp pays dividends each year. In 2006, for example, General Electric paid dividends of $0.317 per share of its common stock, whereas in 2016 the company paid $1.03 in dividends per share in 2016.
  
  Question 8:
  
  You can buy a security now for $1000 and it will pay you $1,191 three years from now. What annual rate of return are you earning?
  
  Question 9:
  
  Your friend deposits $100,000 into an account paying 8% per year. She wants to know how long it will take before the interest makes her a millionaire.
  
  Question 10:
  
  If you can earn 12% on your investments, and you would like to accumulate $100,000 for your child’s education at the end of 18 years, how much must you invest annually to reach your goal?
- 4.2 POINTS TO PONDER / TAKEAWAY Lesson

General

Chapter 4 – Time Value of Money_Part 1

Chapter 4 – Time Value of Money_Part 1

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