Corporate Finance & Time Value of Money

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Grow a deposit forward with FV, compare monthly and annual compounding, and discount a future goal back to today with PV.
• Calculate a level loan payment with PMT and build the full amortisation schedule until the balance reaches zero.
• Convert quoted loan rates into effective annual rates, pick the cheapest lender and turn a credit card's effective rate back into an APR.
• Calculate NPV and IRR for two packaging lines, see that the two rules disagree, and decide which line creates more value.
• Find how many years a lighting retrofit needs to pay back its cost, with and without discounting, using formulas that still work when the cash flows change.
• Price a semi-annual corporate bond with PV, say whether it trades at a premium or a discount, and back out another bond's yield to maturity with RATE.
• Estimate the cost of equity with CAPM, value the equity at market prices and use the WACC as the hurdle rate for a new plant.
• Build the free cash flows of a new oven line, with depreciation, tax, working capital and the after-tax sale at the end, and decide with NPV.