No matter what your profession or career of choice, you ABSOLUTELY need to understand the basic tenets of finance ... your personal and professional success depends on it!
My name is Atif Ikram (Ph.D). I am a Professor of Finance at Arizona State University, and I have created this channel to promote financial literacy. My educational videos are geared towards students, young professionals and small/medium business owners who have limited to no background knowledge in corporate/personal finance.
Feel free to follow me on LinkedIn: www.linkedin.com/in/atif-ikram-654a309/
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Don't let this setback define your trading journey. Keep working hard and striving for success.
Great job
Great video, well explained!
How do you start it to look similar to that I'm currently studying npv in school
Keep up the great work Professor! You’ve been super consistent with uploading 👍🏼🥳
Incredible and very good explanation. Great teacher! :-)
Thank you for this! How about when the annuity actually grows? How do we introduce the growth rate to this calculation?
at 1:57 could you please tell by which formula you arrived at 24,761.90 value?
Of course. I calculated the Present Value of 320,000 as 320,000/1.05, since 5% is the discount rate. From that number I subtracted $280,000 to get $24,761.90. For a deeper understanding of this, please check out this video of mine: kzread.info/dash/bejne/e65rm6xtpafUcdI.htmlsi=BIYaNxtcUFeTVv-m And for a comprehensive playlist on DCF: kzread.info/head/PLQspRe0CBEvhnGaQi18a8I4v8DvL_HWo_&si=6ZGdl8sQpK6dpINU
2:00
Better than the rest🎉🎉
I hate knowing im missing something but the step by step instructions you give tells me ppl like you are missing from the world and we need more people like you thank you.
Excellent and clear explanation! Thanks!
Great video !!!
For bonds paying semi annually, can we consider the discount rate as 10% and coupon rate as 80 while considering the maturity as 7 years? will that make any difference while calculating.
really good explanation
i was stuck on a problem for hours and couldn't get the right answer. 5 minutes into your video and I solved it. what an absolute legend. you earned a new subscriber!!
That was soooo helpful, thank you! You explain good!
Great explanation
Just came across this video, great way to think about financial planning. You were my favorite prof at ASU👍👍
Professor Ikram, thank you so much for the explanation. Could you share the formula you mentioned at 2:10? I think it's out of the recorded screen.
Hi! Sorry, just realized that the formula got cut off! You can view it here: cmaexamacademy.com/wp-content/uploads/2016/10/Screen-Shot-2016-10-26-at-12.36.18-AM.png
so which is better? the present value being higher than the face value or the present value being lesser than the face value? Please explain.
Neither is better per se. If you bought the bond at face value and then the price drops because yields go up (which they HAVE over the past couple of years), then by selling the bond you’ll make a loss. However, if you hadn’t bought the bond before, and by it after the prices drop, then you’d essentially be making a higher return (or yield) than the original coupon rate (assuming you hold the bond till maturity and there is no default risk). I suppose you can say that’s “good” in that sense. So it just depends on the perspective. Does that help?
@@professorikram thank you for taking time to answer. I really want to understand the concept. How do we get the yields or the rate of required return?
@jrs7541 great question! In this video, I treat them as given. In the REAL world, it is not Yield to Maturity that determines the price. Rather it is the price that determines the YTM. People buy and sell bonds in the bond market, and the forces of supply and demand determine the price. If a bond is offering is 3% coupon, but people want 6%, they will demand less of it. This will decrease the price up until the point that where buying at that low price will give you 6%. Now, if your question is - where does the 6% come from … well that demands on a host of factors, primarily including the rate the government is offering on its bonds (ie the “risk free” rate), the inflation rate and the default risk of the bond. That’s a separate video! 😀
thanks man really solve my issue
This is so helpful and explained very clearly. Thank you so much. Would this apply to 2024 Taxes, or have the brackets changed? Also do these taxes cover social Security?
Herrera Corporation has total sales of $3,110,400 and costs of $2,776,000. Depreciation is $258,000 and the tax rate is 21 percent. The firm is all-equity financed. What is the operating cash flow? Can you please explain this calculation to me
does the formula to compute the value of an option change if the NPV without option is negative ? thank you
Good question. No, it does not.
thanks for the video, any way you can share the template?
thanks for the video, any way you can send me that template?
Sir, how can I determine the perpetual dividend growth at 4%?
Incredibly helpful, thanks!
Just discovered your channel, a game changer for me as struggling student ❤
Professor Ikram, I really enjoy watching your videos as well! It is now my routine to come to your channel and watch parts I didn't understand in class. I appreciate your clarity in explaining and generosity in sharing the joy of knowing finance. (I cannot help but leave comments when I never upload any comments) - Undergrad business student from Korea
So kind of you! Thank you!
Thank you so much
thank you
Thank you, nicely done! It seems like this takes the payment at the end of each period(?). Is there an easy way to make the payment due at the beginning, please?
hey there, not understanding why YTM = discount rate. in the previous video, we saw bond pricing dependent on market interest rate. is the annuity formula here saying that the bond offers 8% APR/coupon but the interest rate/market rate is actually 10%? in which case, why is holding this particular bond held til maturity going to equal the same value as buying a new bond from the market today?
Yes, this is saying that coupon (APR) is 8% but market rate (ie the rate bond investors are requiring) is 10%. That is why the value of this bond is less than its face value. I’m not sure I fully understand what you mean by “why is holding this bond till maturity equal to the same value as buying a new bond”. New bonds will likely be issued with a 10% coupon, which is what investors require. So it will have a value of $1,000. By investing in our bond that is only offering 8% coupon , investors will make some money in coupon payments and the remainder in the form of increase in bond price over time.
can we say that YTM is equal to discounted rate ?
Bingo! That is exactly right! 👌
@@professorikram no that is not right at every point.
Hi, could you explain why when calculating the price in year 4, you used 6.16 (dividend 5) instead of 5.92 (dividend 4)?
Prof, tnx for the video! There is a mistake in calculations in Problem 1: E(R) actually equals 4% + 1.38(5%) = 10.9%, not 20%.
my calculation based on the formula is E(R) = 4% +1.39*(5%-4%) = 5.38%
Your explanation always help clear any sort of doubts I have, Thank you so so much, and I really appreciate your efforts.
I tested out your calculator some parts are wrong for the if function on the married filed jointly part!
Hey! I'll check. Thanks for pointing this out.
you explain so clearly, Thanks!!
Man thanks so much. Video was fanstastic and had great details.
thank you
Thank you
This is incredible! So so looking forward to this series 🙌🏻
Well done young man. Excellent initiative. Keep up the good work. 🏆👌👌👌🤲
Thanks great video. However, it seems as all the projects would be good if they have at least one alternative with positive NPV, even if it has a very low probability of occurence. I mean, it is just matter of multiplicating it by a number of expanding options that surpases the negative scenarios. Lets say if the positive option has very low NPV and/or probability, I just say that I can expand the business 1000 times and at the end it will surpases the negative scenario because it doesn't expand. Also another constructive critisism is that in the case that I realized that it is a good business (optimistic scenario), why would I discount the negative scenario? I mean, if I already realized that is a good business and I want to expand it 10 times, I think the NPV will be the 3 x 10 m = 30m. Why would I substract the negative scenario that I already know is not going to happen? Thanks in advance to clarify these issues.
Why when i calculate the YTM normally using YTM function the result is 13% ?
you are my FAVVV TEACHERR, THANKYOUSSS
Very great material as always, Professor Ikram!