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# The Time Value of Money

### Future/Present Value

Find the following values. Compounding/ discounting occurs annually. a. An initial \$ 500 compounded for 10 years at 6% b. An initial \$ 500 compounded for 10 years at 12% c. The present value of \$ 500 due in 10 years at 6%

### Finance questions: Time Value of Money

1-An investment will pay \$ 100 at the end of each of the next 3 years, \$ 200 at the end of Year 4, \$ 300 at the end of Year 5, and \$ 500 at the end of Year 6. If other investments of equal risk earn 8% annually, what is its present value? Its future value? 2- You want to buy a car, and a local bank will lend you \$ 20,000. Th

### 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

### General Accounting

Future value: Chuck Tomkovick is planning to invest \$25,000 today in a mutual fund that will provide a return of 8 percent each year. What will be the value of the investment in 10 years? 5.30 Patrick Seeley has \$2,400 that he is looking to invest. His brother approached him with an investment opportuni

### 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

### Question about Present Value & Future Value

B1. (Present value) What is the present value of \$15,000 to be received 11 years from today when the annual discount rate is 10%? B2. (Future value) What is the future value in three years of \$30,000 invested today when the annual interest rate is 10%?

### 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

### Your uncle offers you a choice of \$30,000 in 50 years or \$95 today. If money is discounted at 12 percent, which should you choose? Why?

Your uncle offers you a choice of \$30,000 in 50 years or \$95 today. If money is discounted at 12 percent, which should you choose? Why?

### 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

### What does the exponent in this case tell us we need to do mathematically to the (1 + i) segment of the formula?

We look at the formula to calculate the dollar amount of a \$1 we put into savings today, we see that it is fv = pv*((1+i)^n). The variables are fv = future value, pv = present value, i = interest rate per period, and n = number of periods. In the formula, n is an exponent. What does the exponent in this case tell us we need

### 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

### Finance

1 Assume a firm has pursued a goal of maximizing accounting profits in a purely literal sense and, as a result, has had positive, as well as growing profits since their inception. Which of the following statements is true? The firm ..... a. is pursuing the primary goal of the organization b. is acting in the best interests

### Discounting rate

When we use the present value theory to discount future amounts, what are we attempting to do or prove? Present value theory provides a basis for valuing something such as a business or a product. As long as the expected future cash flows provide an economic value (i.e., positive net present value) then the item of interest

### 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

### Determining Future Value

Question: What's the future value of \$1,500 after 5 years if the appropriate interest rate is 12%, compounded monthly? Please select the best answer: \$1,922.11 \$2,725.05 \$2,600.11 \$2,230.66 \$2,342.19

### Finding the Future Value of the Given Stream

For each of the mixed streams of cash flows shown in the following table, determine the future value at the end of the final year if deposits are made at the beginning of each year into an account paying annual interest of 12%, assuming that no withdrawals are made during the period. Cash flow stream Year A

### 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, valuation, Rates of Return

Stephens Development Company paid a dividend of\$1.12 over the last 12 months. the dividend is expected to grow at a rate of 20% over the next 3 years(supernormal growth). It will then grow at a normal constant rate of 7% for the forseeable future. The required rate of return is 12% (this will also serve as the discount rate).

### 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

### Current value of the stock..

Stephens Development Company paid a dividend of\$1.12 over the last 12 months. the dividend is expected to grow at a rate of 20% over the next 3 years(supernormal growth). It will then grow at a normal constant rate of 7% for the forseeable future. The required rate of return is 12% (this will also serve as the discount rate).

### 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