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The Time Value of Money

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?

Future Value

How much would $5000 due in 50 years be worth today if the discount rate were 7.5%

Calculating Future Price

Contract Maturity Data Actual Futures Price January 15 $105.00 March 15 $105.10 Suppose the effective annual T-Bill rate is expected to persist at 5% and that the dividend yield is 4% per year. Calculate the "correct" March futures price relative to the January price and comment on any

Time value of money concept

Write a 200-300 word description of the four time value of money concepts: present value, present value of an annuity, future value , future value of an annuity. Describe the characteristics of concept and give examples of when each would be used.

Money Multiplier

Suppose the financial institutions are required to keep 11% in reserve and the ratio of individuals' currency holdings to their deposits is 21%. What is the money multiplier ? If the financial institutions suddenly became concerned about the safety of their loans, and they decide to keep 2% excess reserves (reserves held by b

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

Raising Money for a Wildlife Sanctuary

Using the Change Control Template Document in Appendix D, create a Change Control Document that uses the problem defined in Week 2, and propose a logical change that will fit with your approved project. Raising money for charity for a wildlife sanctuary. This sanctuary will be home to displaced big cats (i.e. lion, tigers).

Present Value at Optimal Time to Sell

You own 100 acres of timberland, with young timber worth $20,000 if logged today. This represents 500 cords of wood at $40 per cord. After logging, the land can be sold today for $10,000 ($100 per acre). The opportunity cost of capital is 10%. You have made the following estimates: (i) The price of a cord of wood will inc

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

Future value calculation

Misty needs to hav $15,100 at the end of 2 years in order to fulfill her goal of purchasing a small sailboat. She is willing to invest the funds as a single amount today but wonders what sort of investment return she will need to ear. Figure out the annully compounded rate of return needed if she can invest $12,500 today. Ann

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

Present value of grandparents trust fund

In 10 years you will begin receiving $155 dollars per year in perpetuity from your grandparent's family trust fund (first payment is exactly 10 years from today). You consider these payments essentially risk free and have decided to discount them at a constant risk free rate of 6.5%. What is the present value today of these fu

Time Value of Money

1. 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 by .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 ra

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

P6-7 (Time Value Concepts Applied to Solve Business Problems)

P6-7 (Time Value Concepts Applied to Solve Business Problems) Answer the following questions related to Derek Lee Inc. (a) Derek Lee Inc. has $572,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is

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

Question about Calculation of earnings per share

Could you explain how to do this? ------------------------- Sales Revenue $3,060 Accounts Receivable 500 Interest Expense 126 Total operating expenses 600 Accounts payable 240 Cost of goods sold 1,800 Preferred stock dividends 18 Tax rate 40% Number of co

Time Value of Money -TVM

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.$1,000 to be received 8 years from now discounted back to the present at 3 percent d.$

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