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The Time Value of Money

Finance: annual compounding, PV, discount rate, FV, annuity, payment amount

? Annsley deposits $1,000 today into a savings account that pays 3% annual interest. How much will she have in 15 years with annual compounding? ? What is the present value of $20,000 to be received in 30 years if the appropriate discount rate is 9%? ? How do we determine the appropriate discount rate to use when computin

Julie needs to pay a $5,000 tuition bill nine months from now. She has some money saved up that she could invest, but she is also considering a trip to Europe. She remembers reading something about how money grows over time, and she wonders if maybe she should just go ahead and invest some money today to pay the tuition bill.

Please see attachment. Julie needs to pay a $5,000 tuition bill nine months from now. She has some money saved up that she could invest, but she is also considering a trip to Europe. She remembers reading something about how money grows over time, and she wonders if maybe she should just go ahead and invest some money today t

Monthly payments

1) If you borrow $20,000 at the interest rate of 10%, what are the end-of-year payments if the loan is for five years? If the interest rate is 12.5% would the monthly payment be higher/lower ** I cant figure out the monthly payments at 12.5%. I have $5,275 a year for the first part 2) If you want to have $800,000 for retir

Future Value of investment after one year at different rates of interest.

(Present and future values) Assume that you are starting with an investment of $10,000. a. What is the future value of the investment after one year if it earns 10% per year? What is the present value of this future value discounted at 10%? b. What is the future value of the investment after one year if it earns 20% per ye

Finance

Which would you prefer? a) An investment paying interest of 12% compounded annually. b) An investment paying interest of 11.7% compounded semiannually. c) An investment paying 11.5% compounded continuously. Work out the value of each of these investment after 1,5, and 20 years. 2.You own a pipeline which will gene

MCQs on TVM, Pricing of Stocks and Bonds, Bond Refunding

1.Luke believes that he can invest $5,000 per year for his retirement in 30 years. How much will he have available for retirement if he can earn 8% on his investment? A. 566,400 B. 681,550 C. 150,000 D. 162,000 2. An issue of common stock has just paid a dividend of $4.00. Its growth rate is equal to 8%. If the required

Please show calculations and explanations to the problems.

Hello, can you please provide the answers and show full calculations and explanations of each of the problems. Thank you. Assume that you are nearing graduation and that you have applied for a job with a local bank. As part of the Bank's evaluation process, you have been asked to take an examination that covers several financ

Future Market Conditions: Macy's

I seem to be stumbling with a portion of my work, could you please lend a hand.... Prepare a paper in which you describe future market conditions that your selected company/industry will face. Explain you conclusions. Address the following topics in your paper: The two portions that I need help with are; Cost Structure

Projected 25 year retirement income stream

44 Assume the following regarding a growing annuity valuation problem: Your salary at the end of the last year that you work is $90,000. You would like your income stream to begin at the end of your first year of retirement with a payment equal to 70% of your last working year's salary. (Assume all amounts are "end-of-year" p

Basic Finance Problems

1.The present value of an ordinary annuity of $2,350 each year for eight years, assuming an opportunity cost of 11 percent, is 1. $27,869. 2. $ 1,020. 3. $12,093. 4. $18,800. 2.Dan plans to fund his individual retirement account (IRA) with the maximum contribution of $2,000 at the end of each year for

Present values and modeling with linear and exponential functions

Present value calculations. Using a present value table, your calculator, or a computer program present value function, answer the following questions: Show formulas. a. What is the present value of nine annual cash payments of $ 4,000, to be paid at the end of each year using an interest rate of 6%? b. What is the present

TVM Problems

See the attached file. 1. Probability of Occurrence 2% 8% 20% 40% 20% 8% 2% $800 $1,000 $1,400 $2,000 $2,600 $3,000 $3,200 Calculate the expected value, standard deviation, and coefficient of varia

Time Value of Money

A) Marigold Merchants has an outstanding issue of $1,000 par value bonds with an 8% coupon interest rate. The issue pays interest annuallly and has 15 years remaining to its maturity date. Bonds of similar risk are currently yielding a 10% rate of return. What is the value of these Marigold Merhant bonds? Is the bond selli

Time Value of Money (TVM) Paper

Time Value of Money (TVM) Paper Prepare a 700-1,050-word paper in which you explain how annuities affect TVM problems and investment outcomes. In your paper, be sure to address the impact of the following items on TVM: Interest Rates and Compounding Present Value (of a future payment received) Future Value (of an

Time value

Please see the attached file. 1. A bank is paying 7.5% APR on a CD. (Note: The convention when there are no periodic payments is to assume annual compounding, unless stated otherwise. Thus this is annual compounding.) If you put $2500 into an account, how much will the account be worth in 3 years? a. 3062.5 b. 3105.74

Leasing, Taxes, and the Time Value of Money

The lessor can claim the tax deductions associated with asset ownership and realize the leased asset's residual value. In return, the lessor must pay tax on the rental income. Questions: a. Explain why a financial lease represents a secured loan in which the lender's entire debt service stream is taxable as ordinary inco

Time Value of Money for Opportunity Cost Rates

What is an opportunity cost rate, is it used in the discounted cash flow analysis, should I show it on my time line and where, and finally is this thing a single number or does it change and if so why?

Interest and the Time Value of Money

Please help with the following: Section 5.1 36, 40, 46, 52 Section 5.2 20, 38, 44, 52, 58, 68 Section 5.3 22, 34, 40 36. Stock Growth A stock that sold for $22 at the beginning of the year was selling for $24 at the end of the year. If the stock paid a dividend of $.50 per share, what is the simple i

What is the present value of the following future amounts?

What is the present value of the following future amounts? a. $800 to be received 10 years from now discounted back to the present at 10 percent b. $300 to be received 5 years from now discounted back to the present at 5 percent c. $1,000 to be received 8 years from now discounted back to the present at 3 percent d. $1,000

Time Value Money for Retirement Planning

63. Retirement Planning. A couple will retire in 50 years; they plan to spend about $30,000 a year in retirement, which should last about 25 years. They believe that they can earn 10 percent interest on retirement savings. a. If they make annual payments into a savings plan, how much will they need to save each year? Assume

Net Present Value of a Airlines Merger

See the attached file. Destination Airlines merges with West World Airlines. Destination Airlines' initial investment for the merger is 1.1 billion. Pessimistic, Most likely, and Optimistic outcomes have been developed by Destination Airlines financial analysts. Initial Investment for Destination Airlines is

Finance Problems: Time Value of Money (TVM), PV, PVIF, FVIF

3. You will receive $5,000 three years from now. The discount rate is 8 percent. a. What is the value of your investment two years from now? Multiply $5,000 _ .926 (one year's discount rate at 8 percent). b. What is the value of your investment one year from now? Multiply your answer to part a by .926 (one year's discount

Unequal Lives: What is the equivalent annual annuity for each machine?

The Perez Company has the opportunity to invest in on of the two mutually exclusive machines that will produce a product it will need for the foreseeable future. Machine A costs $10 million but realizes after- tax inflows of $4 million per year for 4 years. After 4 years, the machine must be replaced. Machine B costs $15 mill