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The Time Value of Money

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

What is the MRP on 4 year US government securities? Which opportunity will yield the largest amount five years from today? How much money does your aunt have to deposit in the bank today? How much will be in the account after your sister makes the second withdrawal two years from today?

You are given the following information k*= 1% Inflation rate is expected to be 2.5% for the next two years, 3% per year for the following two years, and 3.5% per year thereafter. 5 year US government securities have an interest rate that is 0.2% higher than 4 year US government securities The

Time Value of Money: explain it to an 8-year old child with a demonstration

The Time Value of Money Tasks: You have been asked by the local elementary school to come and explain the concept of the time value of money. a) Discuss this topic as you might explain it to an 8-year old child. What would you say? b) What demonstration will you perform to help them understand the topic? Submit though

Time Value of Money- Two alternatives for investment

1. John Smith has received a $1,000,000 gift from his grandmother. Below are two alternatives for investment. Calculate the current value of each. Which investment should John choose and why? A. Invest in a one year government security yielding 5%. B. Invest in real estate with some risk. John has found a piece of prope

TVM, Loan Amortization Schedule, Bonds, and Shares

Problem 1: You plan to retire in exactly 25 years. Your goal is to create a fund that will allow you to receive $55,000 at the end of each year for the 30 years between retirement and death (a psychic told you would die exactly 30 years after you retire). You know that you will be able to earn 11% per year during the 30-year ret

Economics help

US paper currency is made with several features that are difficult to counterfeit, including a security thread, color shifting ink, microprinting, a portrait, a watermark and a fine line printing pattern. As duplication technology continually improves and more and more counterfeits are circulated, what will happen to the followi

Mike Polanski's investment: calculate the PV of future salary, FV of savings

Mike Polanski is 30 years of age and his salary next year will be $40,000. Mike forecasts that his salary will increase at a steady rate of 5 percent per annum until his retirement at age 60. a. If the discount rate is 8 percent, what is the PV of these future salary payments? b. If Mike saves 5 percent of his salary each ye

future training needs

Describe how you would go about analying the future training needs of your current organization.

Personal Vision Statement

Need help with Assignment. Pages 61-65 (McNurlin & Sprague, 2004) address the matter of creating a vision. A vision is a statement of how someone wants the future to be or believes it will be. You have been a member of an IS management team that was asked to create a vision for your company. Create and name an imaginary

Managerial finance: Time value of money, WACC. Impact the decision to expand.

You estimate an increase in sales of 150,000 per year for the first two years, then 250,000 per year over the following 3 years. You will need to invest in 300,000 worth of new equipment. What is the time value of money and how does it apply in this situation? What is the weighted average cost of capital and how does it impact t

Calculating Future Value and Present Value

Calculate the future value of $150,000 fifteen year from today based on the following interest: a. 3% b. 6% c. 9% d. 12% Calculate the present value of $35,000. 20 years from today based on the following annual discount rates: a. 3% b. 6% c. 9% d, 12%

Operating Cash flow, Contribution Margin, TVM questions

1) Michelle electrical is evaluating a project which will increase sales by $50,000 and costs by $30,000. The project will cost $150,000 and be depreciated straight-line to a zero book value over the 10 year life of the project. The applicable tax rate is 34%. What is the operating cash flow for this project? 2) Ralph and E

Future Value

(a) You've inherited $15,000,000 and have decided to use this money to open a shelter for abused women in Aurora one year from today. The annual operating costs are estimated to be $350,000 and are expected to grow at a constant rate of 2% (inflation) starting in year 2. If the interest rate is 4.5%, would you be able to fund th

FV and growth rate using TI83 Finance (TVM solver)

NOTE: if can be perforned with TI83 Finance (TVM Solver) please provide key strokes steps. 1.) You want to go to grad school 3 years from now, and you can save $5,000 per year, beginning one year from today. You plan to deposit the funds in a mutual fund which you expect to return 9% per year. Under these conditions, how muc

Present Value of Cash flow, Future Value of Cash flow

You are considering a project with the following cash flows: Year Cash flow 1 5600 2 9000 3 2000 5. What is the present value of these cash flows, given an 11% discount rate? $8,695.61 $8,700.89 $13,732.41 $13,812.03 $19,928.16 6. What is the future value of the fo

Multiple choice: Time value of money (TVM) for Cathy, Don Corp, Carol Thomas

Cathy sets aside $2,000 each year for 5 years. She then withdraws the funds on an equal annual basis for the next 4 years. If Cathy wishes to determine the amount of the annuity to be withdrawn each year, she should use the following two tables in this order: a. present value of an annuity of $1; future value of an annuity o

Question set: FV, PV, NPV, monthly payment, investments, interest, compounding

Finance Ch5 Q's Answer these questions using Excel functions where applicable. Show formulas and how the answer was obtained. On the first question the instructor wants us to use our present age to nearest month. I am 22 years and 2 months. 1. Assume you drink one coffee per day, 5 days a week. Assume coffee is $4.00. T