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Financial Arithmetic Basics

“The fundamental principle behind market calculations is the time value of money: as long as interest rates are not negative, any given amount of money is worth more sooner than it is later because you can place it on deposit to earn interest.”

Some opening remarks on formulas

Use of an HP calculator

Simple and compound interest

Nominal and effective rates

Future value / present value; time value of money

Discount factors

Cashflow analysis, NPV, IRR and time-weighted rate of return

Annuities

Using an HP calculator for cashflow analysis

Interpolation and extrapolation

Exercises

Where you see the WWW icon in the following, this calculation is available already programmed in Microsoft® Excel to be used online ...

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