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    The Time Value of Money

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    Time money

    1.Find the compound amount if $6,400 is invested for 2 years at 12% compounded monthly. What difference would compounding daily make in this example? 2.Deposits of $1,000, $1,100 and $680 were made into a savings account, the first two years ago, the second 18 months ago, the third 6 months ago. How much is in the account no

    Analyzing the Time Value of Money

    Sally and Ed have approached you with their financial problems, described below. Situation #1 Sally and Ed have $10,000 cash to invest with a bank offering a 4% interest rate. They are not sure whether to invest the cash with the interest compounded quarterly, semi-annually, or annually. Calculate the balance at the end o

    Do you think that TVM is like driving a car?

    Your answer "I think that driving a car and the time value of money are a good analogy. First, the longer you drive your car, the more gasoline you use. Hence, at the end of the journey, that is when you reach your destination, the value of the gasoline in the automobile is much less than when you started the journey. Second, th

    Retirement savings, maximum annual withdrawal

    You plan to have $750,000 in savings and investments when you retire at age 60. Assuming that you earn an average of 9 percent on this portfolio, what is the maximum annual withdrawal you can make over a 25 year period of retirement?

    Future Value and Stock Valuation

    A-Future Value: What is the future value in three years of $1000 invested in an account with a stated annual interest rate of 8 percent, a. Compound annually? b. Compound Semiannual? c. Compound monthly? d. Compound Continuously? e. Why does the future value increase as the compounding period shortens? B-Stock Valuation:

    Bill Shaffer - Future or Present Value

    Bill Shaffer wishes to have $200,000 in a retirement fund 20 years from now. He can create the retirement fund by making a single lump sum deposit today. If upon retirement in 20 years Bill plans to invest the $200,000 in a fund that earns 11 percent, what is the maximum annual withdrawal he can make over the following 15 years?

    Amount to be deposited today

    Bill Shaffer wishes to have $200,000 in a retirement fund 20 years from now. He can crate the retirement fund by making a single lump sum deposit today. If he can earn 10 percent on his investments, ow much must Bill deposit today to create the retirement fund? If he can earn only 8 percent on his investments? Compare and discus

    Future value or present value

    You think that in 15 years it will cost $75,000 to give your child a college education. Will you have enough if you take $25,000 today and invest it for the next 15 years at 8 percent? If you start from scratch, how much will you have to save each year to have $75,000 in 15 years if you can earn an 8 percent rate of return on yo

    Time Value of Money

    1.16 At an interest rate of 8% per year, $10,000 today is equivalent to how much (a) 1 year from now and (b) 1 year ago? 1.20 Certain certificates of deposits accumulate interest at 10% per year simple interest. if a company invests $240,000 now in these certificates for the purchase of a new machine 3 years from now, how

    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

    Computation of Future Values, Present Values, and Bond Prices

    E6-4 (Computation of Future Values and Present Values) Using the appropriate interest table, answer each of the following questions. (Each case is independent of the others.) [a] What is the future value of 20 periodic payments of $4,000 each made at the beginning of each period and compounded at 8%? [b] What is the p

    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

    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

    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