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1、LEARNINGOBJECTIVESAfterstudyingthischapter,youshouldunderstand:LO1HowtodeterminethefuturevalueofanINTRODUCTIONinvestmentmadetoday.LO2HowtodeterminethepresentvalueofcashtobeTOVALUATION:receivedatafuturedate.5LO3Howtofindthereturnonaninvestment.THETIMEVALUEL
2、O4HowlongittakesforaninvestmenttoreachaOFMONEYdesiredvalue.TOYOTAMOTORCREDITCORPORATIONsomeamounttodayinexchangeforapromisedlump(TMCC),asubsidiaryofToyotaMotor,offeredsomesumtobereceivedatafuturedate,isaboutthesim-securitiesforsaletothepubliconMarch28,200
3、8.plestpossibletype.Isgivingup$24,099inexchangeUnderthetermsofthedeal,TMCCpromisedtorepayfor$100,000in30yearsagooddeal?Ontheplustheownerofoneofthesesecurities$100,000onside,yougetbackabout$4forevery$1youputup.March28,2038,butinvestorswouldreceivenothingTh
4、atprobablysoundsgood;butonthedownside,untilthen.InvestorspaidTMCC$24,099foreachyouhavetowait30yearstogetit.Whatyouneedtoofthesesecurities;sotheygaveup$24,099onknowishowtoanalyzethistrade-off;thischapterMarch28,2008,forthepromiseofa$100,000pay-givesyouthet
5、oolsyouneed.ment30yearslater.Suchasecurity,forwhichyoupayMastertheabilitytosolveproblemsinthischapterbyusingaspreadsheet.AccessExcelMasteronthestudentWebsitewww.mhhe.com/rwj.Oneofthebasicproblemsfacedbythefinancialmanagerishowtodeterminethevaluetodayofcash
6、flowsexpectedinthefuture.Forexample,thejackpotinaPowerBall™lotterydrawingwas$110million.Doesthismeanthewinningticketwasworth$110million?Theanswerisnobecausethejackpotwasactuallygoingtopayoutovera20-yearperiodatarateof$5.5millionperyear.Howmuchwastheticketw
7、orththen?TheanswerdependsonthetimevalueofValuationofFutureCashFlowsPART3money,thesubjectofthischapter.Inthemostgeneralsense,thephrasetimevalueofmoneyreferstothefactthatadollarinhandtodayisworthmorethanadollarpromisedatsometimeinthefuture.Onapracti-calleve
8、l,onereasonforthisisthatyoucouldearninterestwhileyouwaited;soadollartodaywouldgrowtomorethanadollarlater.Thetrade-offbetweenmoneynowandmoneylaterthusdependson,amongotherthings,therateyoucanearnbyinvesting.Ourgoalint
