Financial Calculations

The aim of the course: to study the fundamentals of financial calculations and to learn how to apply them in practice for financing and investment decision making. Upon completion of this course students will be able to apply the time value of money in the real challenges and problems, to evaluate investment performance using the appropriate methodology. Main topics: Interest Rates and Rates of Return. Time Value of Money: Future Value and Present Value. Loan Amortization. Bond Valuation. Investment Decision Criteria: Discounted Payback period, Net present value, Internal Rate of Return, Profitability Index. The course includes lectures, case studies and group case analysis project.

To teach students to apply theoretical knowledge of financial management and methods of calculating the time value of money in evaluating financial and investment decisions.

Microeconomics, Macroeconomics, Fundamentals of finance.

1. Theoretical assumptions of financial modeling. 2. Interest calculation methods: simple and compound interest. 3. Nominal and effective compound interest rate. 4. Simple and compound discount calculation methods. 5. Application of Excel in interest calculation models 6.Inflation and taxes 7. Periodic payments future and present value settings: ordinary, due, deferred annuities. 8. Applying Excel in periodic payment calculation tasks 9. Bond evaluation 10. Investment Projects Financial performance evaluation: Payback time method; The net present value; The internal rate of return; Profitability index. 11. Application of Excel in investment project evaluation models.

The student is able to define at least half of the concepts of interest and explain the methods of interest calculation according to at least half of the specified criteria The student is able to describe at least half of the specified determinants and random cash flow characteristics The student demonstrates at least sufficient ability to explain the relationship between risk and return according to more than half of the specified criteria and is able to name at least half of the risk assessment methods according to the specified requirements The student demonstrates at least sufficient time to determine the effect of time on cash flows by solving at least elementary problems, applying only the basic quantitative methods (formulas) to calculate the time value of money (present and future value) according to at least half of the specified requirements. The student demonstrates at least sufficient ability to analyze cash flows using at least half of the specified requirements using different loan repayment methods The student demonstrates at least sufficient ability to calculate and assess the impact of inflation and taxes on the profitability of financial operations using the discounted cash flow method in accordance with at least half of the requirements. The student demonstrates at least sufficient ability to determine the value of bonds using the discounted cash flow method using at least half of the specified requirements. The student demonstrates at least sufficient ability to apply at least half of the specified instruments and criteria to independently analyze investment projects using modern information technology. The student, together with other members of the working group, prepares and defends an oral presentation of the main results of the group homework to the audience, which meets at least half of the necessary requirements.