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# The Time Value of Money

### Ms. Ima Rich Annuity: Calculate the rate of 20 annual installments

Ms. Ima Rich has just passed away. In her will she has left your not-for-profit organization \$2 million dollars to be paid out in annual installments of \$100,000 a year for the next twenty years. The executive director of your organization wants the money now to purchase a new headquarters. You have been charged with find

### Townscape Public Administration: Moratorium on future building projects?

Details: Townscape has been on a five year run of consistent growth. The economy has since begun a downturn and the city government must now decide whether to place a hold on future growth. As a member of the city council you have been asked to consider the pros and cons of new development and its impact on current services. Con

### Solution to "Time Value of Money" question

1. Your parents will retire in 18 years. They currently have \$ 250,000, and they think they will need \$ 1,000,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? 2. You have \$ 42,180.53 in a brokerage account, and you plan to deposit an additional \$

### 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

### Finance Problems (calculating original principal amount, present value, and more...)

1. Hayley makes annual end-of-year payments of \$6,260.96 on a five-year loan with an 8 percent interest rate. The original principal amount was 1. \$25,000. 2. \$30,000. 3. \$31,000. 4. \$20,000. 2.Nico makes annual end-of-year payments of \$5,043.71 on a four-year loan with an interest rate of 13 percent. The original prin

### 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

### Calculating Future Value of ordinary annuity and annuity due

Future Value of annuity : For each case in the accompanying table, answer the question that follow. Amount of Interest Deposit period Case annuity rate (years)

### 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

### Finance: Chapter 3 TVM: expected return, PV, annuity, EAR, price of stock, interest

Chpt. 3 TVM 1. How long does it take a present value amount to triple if the expected return is 9%? a. 8.00 periods b. 8.04 periods c. 12.00 periods d. 12.75 periods e. insufficient information to compute 2. What is the PV of a 5-year annuity due (payments at beginning of period, aka annuity in advance) of \$550 if

### 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: intangibles, conflicts of interest, agency costs, NPV, expected payoff, annuity

1. The following are examples of intangible assets except ______. building trade marks patents technical expertise 2. The following are advantages of separation of ownership and management of corporations except ______. corporations can exist forever facilitate tra

### TVM: future value of annuities - Weatherspoon, Lance Armstrong, Bogut, Sonic Foundry

1. Clarence Weatherspoon, a super salesman contemplating retirement on his 55 birthday, decides to create a fund on an 8% basis that will enable him to withdraw \$20,000 per year on June 30th, beginning in 2014 and continuing through 2017. To Develop this fund, Clarence intends to make equal contributions on June 30th of e

### 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