The aim of this course is to provide an introduction to the calculus involved in time value of money applications. At the end of the course students should be able to: understand the time value of money concept; understand compound and discount operations; apply compound and discount operations to financing and capital budgeting decisions.
1. Time value of money
2. Future values, current values and capital equivalence
2.1. Capitalization and present value on simple interest regime
2.2. Compound interest capitalization and restatement
2.3. Interest rate relationships
2.4. Continuous capitalization
2.5. Equivalence of capital
3. Annuities and perpetuities
3.1. Basic concepts
3.2. Annuities
3.3. Growth annuities
3.4. Perpetuities
3.5 Growth perpetuities
4. Sources of funding
4.1. Classic loans
4.2. Finance leasing or leasing
4.3. TAE; TAEG and TAER
4.4. Euribor
5. Capital budgeting
5.1. The finance manager and the company
5.2. Management objective (financial)
5.3. Essential of accounting documents
5.4. Valuation of real asset investment projects
5.5. Valuation of financial assets: stocks and bonds
The teaching methodology relies on 50% of theoretical lectures and 50% of theoretical-practical lectures. During the theoretical lectures the topics are presented by the professor and discussed with the students individually or in group. In the theoretical-practical lectures the students discuss several exercises pre-assigned by the professor.
Main bibliography
- Matias, R. (2024). Cálculo Financeiro - Teoria e Prática (7.ª edição). Escolar Editora.
Complementary bibliography
- Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2020). Essentials of Corporate Finance (10th edition). McGraw-Hill.
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