Compounding - Growth in the Future Interest Rate # of Payments Payment Example 1 0.06 1.00 Example2 Example3 Example4 0.05 0.06 0.06 10.00 100.00 40.00 -5,000.00 -4,000.00 -100.00 0.00 0.00 0.00 0.00 - -- Present Value -1.00 0.00 Type FV of $1.00 in One year if earning 6% Example 2 Example 3 Example 4 Examp1 Examp2 Examp3 Examp4 0.04 0.10 0.10 0.05 1.00 10.00 10.00 30.00 0.00 0.00 - 100.00 -30,000.00 1.00 - 10.000.00 0.00 0.00 0.00 0.00 0.00 0.00 Discounting - Bringing Future Cash Flows to Today interest rate of Payments PV of $1.00 Payment Future Value PV of $10,000.00 in 10 Years Market = 10% Type - PV of $1,000.00 each year for 10 Years when Market = 10% Example 1 Example 2 Example 3 Example 4 Market Interest is 8% Compounding - Growth in the Future Interest Rate # of Payments Payment Example 1 0.06 1.00 Example2 Example3 Example4 0.05 0.06 0.06 10.00 100.00 40.00 -5,000.00 -4,000.00 -100.00 0.00 0.00 0.00 0.00 - -- Present Value -1.00 0.00 Type FV of $1.00 in One year if earning 6% Example 2 Example 3 Example 4 Examp1 Examp2 Examp3 Examp4 0.04 0.10 0.10 0.05 1.00 10.00 10.00 30.00 0.00 0.00 - 100.00 -30,000.00 1.00 - 10.000.00 0.00 0.00 0.00 0.00 0.00 0.00 Discounting - Bringing Future Cash Flows to Today interest rate of Payments PV of $1.00 Payment Future Value PV of $10,000.00 in 10 Years Market = 10% Type - PV of $1,000.00 each year for 10 Years when Market = 10% Example 1 Example 2 Example 3 Example 4 Market Interest is 8%