5. (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 $7,000 at the end of 5 periods at 8% compounded interest? b. What is the present value of $7,000 due 8 periods hence, disc
Questions on Time Value of Money, inflation, frequecy of compounding (daily, monthly, or quarterly compounding)
Why does money have a time value? Does inflation have anything to do with making a dollar today worth more than a dollar tomorrow? If, as an investor, you had a choice of daily, monthly, or quarterly compounding, which would you choose? Why?
37. Given some amount to be received several years in the future, if the interest rate increases, the present value of the future amount will be (pick the best answer) 1 higher 2 lower 3 stay the same 4 cannot tell 5 variable
The more frequent the compounding, the higher the future value, other things equal. A) True B) False 2. For a given amount, the lower the discount rate, the less the present value. A) True B) False 3. How much will accumulate in an account with an initial deposit of $100, and which earns 12% inter
I have attached a format to use for the following questions. I need help, because for some of these I have been searching online for a calculator that can help me an I need help with these and others. The week 2 word document are the questions and the excel document is the template the have to go in. --- 1.Present Valu
I would like someone to explaine the following problems (See attached file for full problem description) --- - Retirement savings - Annuity Value - Amortizing Loan ---
Using a calculator can you show me step by step how I can calculate a monthly mortgage payment. For example the mortgage is $120K, the rate is 4.5% and the term is 360 months. Further suppose I decide to pay off the mortgage at year 5, what would the amount owed be? I have read the book and see the formula, I can calcul
I have two questions but question 2 has three parts: 1) Using the Rule of 72, how much would $5,000 accumalte to after 27 years if the rate of return is 8% ? 2 a) What woudl the value of a $1000 face value bond with a stated interest rate of 9% return and a 10 year life ? b) if the intrest rate increased to 10%, what wo
Company makes a deposit of $600,000 on 1/1/01 and a deposit of $400,000 on 1/1/03 into an account that pays interst at 6% compounded semiannually. On 1/1/04, Company transfers the entire balance in the account to a new account that pays interest at 8% compounded quarterly. Company then deposits %500,000 into the account on 1/1
What factors should you consider before deciding which company to buy?
These are just exercises. I need help with figuring out the formulas on all 5 questions. Thanks! (Complete problem also found in attachment) 1. Annuity Values. a. What is the present value of a 3-year annuity of $100 if the discount rate is 6 percent? b. What is the present value of the annuity in (a) if you hav
1. U have been tracking a non-dividend paying share that you purchased. Its price since you purchased it (t = 0) until today (t = 3) has been P0 = $27.50, P1 = $17.50, P2 = $31.50 and P3 = $26.50. a) Compute the periodic rates of return. b) Compute the arithmetic and geometric rate of return for this stock over the pas
1) Would you rather have a hundred dollars today or a hundred dollars a year from now? Why? 2) What are the underlying concepts behind time value of money? 3) What are examples of long-term notes payable in our personal finances? 4) Why is unearned revenue considered a liability?
A famous quarterback just signed a $15 million contract providing $3 million a year for 5 years. A less famous receiver signed a $14 million 5-year contract providing $4 million now and $2 million a year for 5 years. Who is better paid? The interest rate is 10%. Please show all work. Thanks!
1. Person A's portfolio is worth $100,000 today. He expects to retire in 10 years and also expects to earn an 8% return per year on his portfolio until he retires. Person A's yearly statement from the Social Security Administration projects that he will receive a constant amount of $2000 per month beginning at his retirement
Capital Budgeting: For the new ultrasound machine, compute the: cash payback period, net present value, annual rate of return.
Newman Medical Center is considering purchasing an ultrasound machine for $1,150,000. The machine has a 10-year life and an estimated salvage value of $30,000. Installation costs and freight charges will be $19,200 and $800, respectively. The center uses straight-line depreciation. Newman's cost of capital is 9%. The med
Present Value Years Interest Rate Future Value 4 4% $15,451 9 12% 51,557 14 22% 886,073 18
I'm having a problem trying to assess a company's current performance and assessing their future. I have part of the statement of cash flows, and all of my figures match and are ok. I'm stuck trying to figure out how they are currently performing, and how to assess their future. There are so many equations, and I'm not sure w
Please see the attached case study.
This problem involves a contract where someone receives money every few months for a certain length of time and then wants to sell the contract for an arbitrage oppurtunity. Anyone can buy or sell a contract that entitles the owner (buyer) to receive $80.00 every six months for the next two years (payments made at the end of
1/ In fifteen years you need $1,000,000 to move to Fiji. Ten years from now you can invest in a five year investment that pays 12% interest compounded quarterly. Five years from now you can invest in a five year investment that pays 10.5% compounded semiannually. If you are able to earn 8.25% interest compounded monthly for the
The amount of money that would need to be invested today at a given interest rate over a specified period in order to equal a future amount is called _______. future value, present value, future value interest factor, or present value interest factor I believe the answer is - future value interest factor - please advise a
1.Consider the normal distributions drawn below (with different scales) They both have m = 20 and the area of the shaded region of each is 0.90. Which of the following holds? a. x1 < x2 b. x1 > x2 c. x1 = x2 d. There is not enough information e. x1 ³ x2 2.If you deposit $5000 into a fund paying 6% interest compound
Provide two examples of real world situations that apply the time value of money concepts.
How do i compute the PRESENT VALUE of a$100 cash flow for the following combinations of discount rates and times? a. r=8 percent t= 10 years b. r=8 percent t= 20 years c. r=4 percent t=10 years d. r=4 percent t=20 years And how do I compute the FUTURE VALUE for a $100 cash flow for the same combination of rates and time
Assume you intend to retire 25 years from today. During your retirement years you need to have an annual income flow of $86,000 per year for 15 years with the amount occurring exactly 25 years from today. On the 15th year of retirement, in addition to the lump sum, you need an additional $150,000 for miscellaneous purposes. You
If we assume that the interest rate is 4%. And the inflation will be 3%. The salary is $40,000 and the time period is 25 years. What is the future value of the salary in 25 years? Please show the calculations. Will this amount be enough to live on in 25 years?
1. XYZ has decided to join a national franchise. Annual year-end cash flow is expected to increase by $10,000. At a 12 percent effective required return, what is the value of the franchise affiliation? 2. XYZ purchased new 20-year 6% bonds of BMC Corporation for $100,000 each when they were issued two years ago. I
I am evaluating a company. It is considered to be 2002, and this time, the company & the whole industry is considered unprofitable. The company doesn't pay dividends on its common shares. I have decided to value the company using my forcasts of FCFE and assume: * The company has 17 billion outstanding shares * Sales will
Present value for 1$: 1. You want to begin a college fund for your newborn child; you hope to accumulate $ 30,000 by 18 years from now. If a current investment opportunity yields 7 percent, how much must you invest in a lump sum to realize the $30,000 when needed? 2. You hope to retire in 25 years and want to deposit a si