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The Time Value of Money

Future Values Calculation

Trying to figure out how much will I have in 8 years if I receive $250,000 in two years, and invest it for six more years at 7.9% percent per year.

Earnings Per Share

What is the earnings per share of stock in a company that finances 75% of the company's $4,000,000 total capital needs with debt and has an operating income of $500,000, 10% cost of debt, 30% tax rate, and book value of $8.75. a) $1.75 , b) $2.00 , c) 2.21 , d) .88 , e) 1.22

Environmental Science: The Irish Potato Famine: 1846 - 1850

Scenario: You are a demographer, a person who studies population patterns. Like most demographers, you are well aware of the growth of the human population in the last century. In 1900, the earth had a population of about one and a half billion people. By 2000, earth's population had quadrupled to six billion people. Most of

Negative Growth: Value of a share

Horse and Buggy Inc. is in a declining industry. Sales, earnings, and dividends are all shrinking at a rate of 10 percent per year. Please answer a. b. c. d. and explain/show how you determined the answers. a. If r = 15 percent and DIV1 = $3, what is the value of a share? b. What price do you forecast for the stock next

Discounting Methods: The concept of discounting should be used in order to keep track of real costs for the purpose of planning. Calculate the present value of the estimated benefit stream at all three discount rates. Explain the effect of higher and lower discount rates.

Hopeful House, a nonprofit orgnanization serving the Big City community, is considering building a playground. It needs to rationally convince the Community Chest that its project is worthy of a special grant by calculating the present value of future benefits. The financial manager estimates future benefits of the playground at


Discuss the time value of money and why this is important. Define the following terms in detail. · Present Value · Future Value · Net Present Cost · Annualized Cost

FCFE per share / Current Value

Abbey Naylor, CFA, has been directed by Carroll to determine the value of Sundanci's stock using the free cash flow to equity model. Naylor believes that Sundanci's FCFE will grow at 27 percent for two years and 13 percent thereafter. Capital expeditures, depreciation, and working capital are all expected to increase proportio

College Investment Account

You just became a parent yesterday and you have suddenly realized that you will need to start saving money to send your child to college. After doing some research on the internet, you estimate that a four year college will cost $50,000 per year. How much money would you need to put into your child's investment account today

Savings and Retirement Calculation

You have just turned 25, and you intend to start saving for your retirement. You plan to retire in 43 years when you turn 68. During your retirement you would like to have an annual income of $120,000 per year for the next 27 years (until age 95). Calculate how much you would have to save between now and age 68 in order to f

Money supply

Show graphically and explain the demand for money and supply of money and equlibrium condition for the economy.

Relationship between PV of future cashflows & multiples based acctg info.

Can any of you OTAs help me answer this question with a short answer please?- a- In your finance course work you learned that value is the present value of expected net future cash flows. What is the relation between this approach and the use of multiples based on accounting information? b- How are valuations based on fi

John plans to retire in 15 years, and he wants to have an annuity

Question 1 (TVM) (15 marks) This question consists of the following three independent parts. (a) John plans to retire in 15 years, and he wants to have an annuity of $50,000 a year for 20 years after retirement. John wants to receive the first annuity payment at the end of the 15th year from today (the same day as his retireme

Time value of money problem

1.If Ryan who is 27 years old, wants to have one million dollars(today dollars) when he retires at age 65, how much should he save in equal monthly deposits from the end of the next month. Assume his savings earn a rate of 7% per year (A.P.R) 2. If Ryan who is 27 years old, wants to have one million dollars(today dollars) whe

Time Value of Money Application

Will you highlight some of the key components of Time Vlue of Money (TVM). Also will you identify at least one financial application of TVM employed by commercial banks, credit card financial services companies, insurance companies, state governments-lotteries and retirement plan financial service providers.

Managerial Finance - Time Value and Money

1. Could you explain why debtors benefit during periods of high inflation. Why would someone in Argentina want to have debt and why does money have a time value? 2. Also, how is the present value of a lump sum related to the present value of a stream of payments? How is this helpful for retirees that are considering taking

Time Value of Money

What is the present value of the following cash flow stream at an interest rate of 12.0% per year? $0 at Time 0; $1,500 at the end of Year 1; $3,000 at the end of Year 2; $4,500 at the end of Year 3; and $6,000 at the end of Year 4. A. $9,699.16 B. $10,209.64 C. $10,746.99 D. $11,284.34 E. $11,848.55

Time Value of Money

Your girlfriend just won the Florida lottery. She has the choice of $15,000,000 today or a 20-year annuity of $1,050,000, with the first payment coming one year from today. What rate of return is built into the annuity? A. 2.79% B. 3.10% C. 3.44% D. 3.79% E. 4.17%

Present Values

Compute the present value of a $100 cash flow for the following combinations of discount rates and times: r = 8 percent. t = 10 years. r = 8 percent. t = 20 years. r = 4 percent. t = 10 years. r = 4 percent. t = 20 years

Time Value Analysis

1. If you deposit money today into an account that pays 6.5 percent interest, how long will it take for you to double your money? 2. John Roberts has $42,180.53 in a brokerage account, and he plans to contribute an additional $5,000 to the account at the end of every year. The brokerage account has an expected annual return o

Investment -Time Value of Money

You have been asked to assist your friends with some personal financial planning. Following their current budget they find they are able to save approximately $10,000 per year. They expect their investments to grow at a nominal rate of 8% and you expect inflation to remain at approximately 4% per year. Your friends expect to

Future Value and Present Value Problems

A) Dwayne Wade Company recently signed a lease for a new office building, for a lease period of 10 years. Under the lease agreement, a security deposit of $12,000 is made, with the deposit to be returned at the expiration of the lease, with interest compounded at 10% per year. What amount will the company receive at the time t

Multiple Choice questions on TVM (Time Value of Money)

Question 1. On March 5th, a couple took out a 90-day loan for $450 at 9% interest. On March 29th, they made a partial payment of $150. After making the payment, how much did they still owe? a. $300.00 b. $300.90 c. $301.80 d. $302.70 Question 2: On January 10th, Park & Jason, Inc. took out a 3-month , 8% note fo

Time Value of money: Present Value

Sally Hamilton has performed well as the chief financial officer of the Maxtech Computer Company and has earned a bonus. She has a choice among the following three bonus plans: 1. A $50,000 cash bonus paid now; 2. A $10,000 annual cash bonus to be paid each year over the next six years, with the first $10,000 paid now. 3. A t

Time Value of money: Future Value

Mary established a savings account for her son's college education by making annual deposits of $6,000 at the beginning of each of six years to a savings account paying 8%. At the end of the sixth year, the account balance was transferred to a bank paying 10%, and annual deposits of $6,000 were made at the end of each year from

Time Value of Money (TVM) Questions, Price of bonds, Stock price

1. Carrie Tune will receive $19,500 for the next 20 years as a payment for a new song she has written. If a 10 percent rate is applied, should she be willing to sell out her future rights now for $160,000? 2. If you owe $40,000 payable at the end of seven years, what amount should your creditor accept in payment immediately i

Excel Spreadsheet - TVM questions

Financial Management Questions. See attached file for full problem description. a. Find the FV of $1,000 invested to earn 10% after 5 years. Answer this question by using a math formula and also by using the Excel function wizard. Inputs: PV = 1000 i = 10% n = 5 Formula: FV = PV(