This course provides an introduction to the valuation of cash flows. Topics include: compound interest functions; valuation of annuities certain; loans repayable by instalments; comparison of value and yield of cash flow transactions; valuation of fixed interest securities, with and without tax on interest and capital gains; duration and volatility of securities; introduction to concept of immunisation and matching; consumer credit contracts.
Learning Outcomes
Upon successful completion, students will have the knowledge and skills to:
- Define and describe the use of cash flow models, simple and compound rates of interest and discount as well as compare and distinguish between nominal and effective rates of interest and discount.
- Describe various types of annuities and perpetuities and use them to solve financial transaction problems.
- Describe equations of value and various tools like linear interpolation and annuity tables.
- Compare capital budgeting decision tools like net present values, internal rates of return and discounted payback periods.
- Analyse basic fixed interest financial transactions like loan valuation, fixed interest securities (e.g. bonds) and employ the skills developed in this course to evaluate such transactions. Incorporate the effects of taxation on such financial transactions.
- Demonstrate an understanding of and employ the term structure of interest rates to calculate forward and spot rates.
- Define interest rate risk in terms of duration and convexity of fixed interest products, using this to define immunisation and assess its use in mitigating interest rate risk.
Indicative Assessment
- Typical assessment may include, but is not restricted to: exams, assignments, quizzes, presentations and other assessment as appropriate (100) [LO 1,2,3,4,5,6,7]
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Workload
Students are expected to commit 130 hours of work in completing this course. This includes time spent in scheduled classes and self-directed study time.
Requisite and Incompatibility
Prescribed Texts
Information about the prescribed textbook will be available via the Class Summary.
Fees
Tuition fees are for the academic year indicated at the top of the page.
Commonwealth Support (CSP) Students
If you have been offered a Commonwealth supported place, your fees are set by the Australian Government for each course. At ANU 1 EFTSL is 48 units (normally 8 x 6-unit courses). More information about your student contribution amount for each course at Fees.
- Student Contribution Band:
- 1
- Unit value:
- 6 units
If you are a domestic graduate coursework student with a Domestic Tuition Fee (DTF) place or international student you will be required to pay course tuition fees (see below). Course tuition fees are indexed annually. Further information for domestic and international students about tuition and other fees can be found at Fees.
Where there is a unit range displayed for this course, not all unit options below may be available.
| Units | EFTSL |
|---|---|
| 6.00 | 0.12500 |
Offerings, Dates and Class Summary Links
ANU utilises MyTimetable to enable students to view the timetable for their enrolled courses, browse, then self-allocate to small teaching activities / tutorials so they can better plan their time. Find out more on the Timetable webpage.
Class summaries, if available, can be accessed by clicking on the View link for the relevant class number.
First Semester
| Class number | Class start date | Last day to enrol | Census date | Class end date | Mode Of Delivery | Class Summary |
|---|---|---|---|---|---|---|
| 3361 | 23 Feb 2026 | 02 Mar 2026 | 31 Mar 2026 | 29 May 2026 | In Person | N/A |
Second Semester
| Class number | Class start date | Last day to enrol | Census date | Class end date | Mode Of Delivery | Class Summary |
|---|---|---|---|---|---|---|
| 8364 | 27 Jul 2026 | 03 Aug 2026 | 31 Aug 2026 | 30 Oct 2026 | In Person | N/A |