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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


      Lecturer Image
◄Chapter 4 – Time Value of Money_Part 1 Chapter 5 – Capital Budgeting►

Chapter 4 – Time Value of Money_Part 2

  • Chapter 4 – Time Value of Money_Part 2

    CHAPTER 4: TIME VALUE OF MONEY

    WEEK 6 (Lecture) and (Tutorial)

    SYNOPSIS / OVERVIEW

    Lesson 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 Lesson 4 (Week 6):

    • Future and Present Values of Multiple Cash Flows
    • Valuing Level Cash Flows: Annuities and Perpetuities
    • Comparing Rates: The Effect of Compounding Periods

    LEARNING OUTCOMES

    By the end of this lesson, student should be able to:

    • Calculate the number of periods that equates a present value and a future value given an interest rate.
    • Calculate the Future and Present Values of Multiple Cash Flows.
    • Calculate valuing Level Cash Flows: Annuities and Perpetuities.
    • Comparing Rates: The Effect of Compounding Periods.

    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.

    Difference Between Annuity and Perpetuity (with Formula, Example and Comparison Chart) - Key Differences

    • OBA3105_INTRODUCTION TO FINANCE_VIDEO 4(b)_CHAPTER 4 File

      CHAPTER 4 : TIME VALUE OF MONEY PART 2


    • SELF CHECK 4.1 (b) : Online Discussion Forum
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      Once completed view the video. Let's discuss!

      Tutorial (4) _Discounted Cashflow calculations.

      ▪ Details: 10 questions

      ▪ Duration of submission: 1 week

       

      Question 1 :

      You are saving for a new house, and you put $10,000 per year in an account paying 8%. The first payment is made today. How much will you have at the end of 3 years?

      Question 2 :

      Mr. James are ready to buy a house and he allocate his money which is amount RM 20,000 for a down payment and closing costs. Closing costs are estimated to be 4% of the loan value. His annual salary amount was RM 36,000. The bank is willing to allow his monthly mortgage payment to be equal to 28% of Mr. James’s monthly income. The interest rate on the loan is 6% per year with monthly compounding (.5% per month) for a 30-year fixed rate loan.

      a.    How much money will the bank loan for Mr. James?

      b.   How much can Mr. James offer for the house?

      Question 3 :

      You are offered an investment that will pay you RM200 in year 1, RM400 the next year, RM600 the following year, and RM800 at the end of the 4th year. You can earn 12% on similar investments. What is the most you should pay for this one?

      Question 4 :

      How much money will you accumulate by the end of year 10 if you deposit $3,000 each for the next ten years in a savings account that earns 5% per year?

      Question 5 :

      Suppose you would like to have $25,000 saved 6 years from now to pay towards your down payment on a new house. If you are going to make equal annual end-of-year payments to an investment account that pays 7%, how big do these annual payments need to be?

      Question 6 :

      How much must you deposit in a savings account earning 8% interest to accumulate $5,000 at the end of 10 years?

      Question 7 :

      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?

      Question 8 :

      What is the present value of an annuity of $10,000 to be received at the end of each year for 10 years given a 10 percent discount rate?

      Question 9 :

      What is the present value of $600 perpetuity at 7% discount rate?

      Question 10 :

      How much money will be in an account in 5 years if $10,000 is deposited now at an interest rate of 1% per month? Use three different interest rates: (a) monthly, (b) quarterly, and (c) yearly.



◄Chapter 4 – Time Value of Money_Part 1 Chapter 5 – Capital Budgeting►