About This Chapter
Discounted Cash Flow Valuation - Chapter Summary and Learning Objectives
This chapter helps you learn to use cash flows and valuations to determine the value of investments. In order to determine the value of a company, it can be necessary to predict the future of cash flows in and out of the business and how various financial instruments and structures can influence these numbers. These comprehensive lessons will help you lean about:
- The value of cash flows
- Annuities and perpetuities
- Interest rate calculation
- Types of common loans
|Present & Future Values of Multiple Cash Flows||Explain cash flow valuation|
|What is Annuity? - Definition, Formula & Quiz||Explore annuities|
|How to Find the Value of an Annuity||Determine the present value for annuity cash flow|
|What is a Perpetuity? - Definition & Formula||Understand the perpetuity formula|
|Compounding Interest Formulas: Calculations & Examples||Examine and compare types of interest|
|Loan Types: Pure Discount, Interest-Only & Amortization||Explain the differences between loans|
1. Present & Future Values of Multiple Cash Flows
$100 today is not worth the same as $100 was 50 years ago, nor is it worth the same as $100 will be in 50 more years. In this lesson, we'll discuss the time value of money and how it influences the present and future values of cash.
2. What is Annuity? - Definition & Formula
In this lesson, you'll learn about payments that occur at regular time intervals, or in financial terms, annuities. Afterwards, test your understanding of the lesson with a quiz.
3. How to Find the Value of an Annuity
Want to see how much money you will have in the future if you make a set payment every month towards your annuity? Then watch this video lesson for the formula and how to use it.
4. What is a Perpetuity? - Definition & Formula
This lesson defines and explains what a perpetuity is. It also provides examples of perpetuities and introduces a formula to calculate the present value of a perpetuity.
5. Compounding Interest Formulas: Calculations & Examples
Compound interest is a great way to have your money work for you. In this lesson, find out the formula for calculating compound interest and practice using the formula with several examples.
6. Loan Types: Pure Discount, Interest-Only & Amortization
This lesson explores three types of loans: pure discount, interest-only, and amortizing loans. We'll examine how these loans are repaid and how the lender makes a profit.
Earning College Credit
Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.
To learn more, visit our Earning Credit Page
Transferring credit to the school of your choice
Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.
Other chapters within the Finance 101: Principles of Finance course
- Introduction to Corporate Finance
- Financial Statements, Taxes & Cash Flow
- Financial Statement Basics
- Long-Term Financial Planning & Growth
- Introduction to Valuation Methods
- Interest Rates & Bond Valuation
- Stock Valuation
- Net Present Value & Investment Basics
- Capital Investment Decisions
- Accounting Risk & Return
- Return, Risk, & the Security Market Line
- Options & Corporate Finance
- Cost of Capital
- Financial Leverage & Capital Structure
- Dividends & Dividend Policy
- Short-Term Financing & Planning
- Cash & Liquidity Management
- Credit & Inventory Management
- International Corporate Finance
- Studying for Finance 101