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The Time Value of Money

Time value of money

1.A salesperson tells you that you can buy the car you are looking at for $3000 down and $200 a month for 48 months. If interest is 14% compounded monthly: a)What is the selling price car? b)How much interest will you pay during the 48 months? 2.A man deposits $2000 in an IRA on his 21st birthday and on each subseque

Time value of money

1. How long will it take double if invested at 12% compounded monthly? 2. Colortime Rent To Own sells a compact disk stereo for $3,000. You pay one third down and amortize the rest with equal payments over a 2 year period. If you are charged 1.5% interest per month on the unpaid balance. a) What is your monthly payment?

What are some key components of Time Value of Money?

What are some key components of Time Value of Money and how it related to: Commercial Banks, Insurance companies, State Governments - Lotteries, Retirement plan financial service providers, Credit card financial service companies?

The Required Rate of Return and Discounting Perpetuity

1) Given an interest rate of 10% per year, what is the value at the end of year 5 of a perpetual stream of $120 annual payments starting at the end of year 9? 2) Theoretical decision to release a new revision of a book: Company estimates the new revision will cost $40,000. Cash flows from increased sales will be $10,000 in t

Multiple Choice Questions on Time Value of Money and Rate of Return

2. Present Value What is the present value of: 1. $9,000 in 7 years at 8 percent? 2. $20,000 in 5 years at 10 percent? 3. $10,000 in 25 years at 6 percent? 4. $1,000 in 50 years at 16 percent? 3. Future Value If you invest $9,000 today, how much will you have: a. In 2 years at 9 percent? b. In 7 years

Time value of money

Find the following values, using equations. Disregard rounding the differences. A) an initial $500 compounded for 1 yr at 6% B) an initial $500 compounded for 2 yrs at 6% C) The present value of $500 due in 1 yr at a discount rate of 6% D) The present value of $500 due in 2 years at a discounted rate of 6% E) An initial

Baby boomer hits retirement age in year 2011

Baby boomer hits retirement age in year 2011, what types of information would assist in forecasting market potential and future demand for products and services of this emerging maturity market?

Time Value of Money in Investments

Problem #1 Smolinski company is considering an investment which will return a lump sum of $5000,000 five years from now. What amount should simolinski company pay for this investment to earn a 15% return. Problem #2 Kilarny company is considering investing in an annuity cintract that will return $20,000.00 annually at the e

Computing mean time

The following historical time between failure and repair time for a certain punch press is available. The machine was installed in the month of June after an appropriate burn-in period. The first breakdown happened on August 5, after 221 hours of use. (see chart in attached file) Date 8/5 11/6 12/19 2/7 3/30 # of hrs of

Present value problem

What is the present value today of your projected monthly retirement check of $2,000 (your estimate which you will receive when you reach 65)? You turn 65 in 25 years and you think inflation will be 6 percent a year between now and your retirement.

Time required to pay off a Car loan

I want to buy a car. I can get a loan for $6,000.00 at a 12% interest rate. I can afford $230.00 a month for payments. How long will it take me to pay off the loan.

Jane is a finance major at a university...

Jane is a finance major at a university and has a $600 overdue debt for books and supplies at the bookstore. She has only $200 in her checking account and doesn't want her father to know about this debt. The manager at the bookstore tells her that she may settle the account in one of two ways since she cannot pay it all now.

Explain concept

23. Annuities and Interest Rates. Professor's Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $80,000 at age 65, the firm will pay the retiring professor $600 a month until death. a. If the professor's remaining life expectancy is 20 years, what is the monthly rate on this annuity? What is

Compounding of Interest,Present & Future Value of Investment

Explain how annuities affect TVM problems and investment outcomes with the impact of the following items listed below - this does not have to be exstensively long a. Interest Rates and Compounding b. Present Value (of a future payment received) c. Future Value (of an investment) d. Opportunity cost e.

Interest & TVM

What is the difference between "simple" and "compound" interest? What are some of the uses of compound interest in business? How is a home mortgage an example of TVM?

Interest and the time value of money

1)You would like to take a cruise in six years. The cruise currently costs $4,250. You expect the price to increase by 4% annually. You can earn 5% on your savings. How much do you need to save at the end of each month so you will be able to afford your cruise in six years? 2)You invest $250 in your savings account at the end

Future Challenges

What could Starbucks do to make its stores even more elegant that welcomed, rewared and suprised customers? What new products and experiece can Starbucks provide and how can they reach people who are not coffee drinkers? What strategic paths can Starbucks pursue its objectives as becoming the most respected and recognized br

Operating and Financial Leverage, TVM, Capital Budgeting, International Finance

Please help with the questions below, most are multiple choice, but some just need an answer....thank you. #1 If the variable cost per unit increases while the sales price per unit and total fixed costs remain constant, the _______________. a. break-even point increases b. break- even point decreases c. break- even poin

Earnings per share

Below is an attatched excel file to help solve this problem. Just look over at the stock prices to figure it out. What is Standard Hopkinson's earnings per share?

Time Value of Money - Continuous Compounding

You make deposits of $2 each year for 30 years. The rate of interest that will prevail is 10 percent for the first 20 years and then 12 percent for the remaining period. If the interest rate is compounded continuously, what is the present and future value of these deposits.

Practice problems

(Helpful hint: Excel Spreadsheet or financial calculator will make calculations easier.) Chapter 7(Brealey et al) Practice Problems 1. NPV rule states that you should accept projects with a positive net present value. a. True b. False 2. If you're comparing two mutually exclusive projects which both have positive NPV,

12624 Q ACC financial accounting

Spirit Software Inc. is a computer software company that generated $ 12 million in pre-tax operating income on $ 100 million in revenues last year; the firm is stable and does not expect revenues or operating income to change over the next 10 years. Its inventory management is in shambles and inventory as a percent of revenues a