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The Time Value of Money

Retirement Question: If the interest rate is 5%, how much must you set aside each year to make sure that you will have $2 million in the account on your 65th birthday? Under this plan, how much will you put into the account today?

Q1: You are saving for retirement. To live comfortably, you decide you will need to save $2 million by the time you are 65. Today is your 30th birthday, and you decide, starting today and continuing on every birthday up to and including your 65th birthday, that you will put the same amount into a savings account. If the inte

Calculating future and present values of a lump sum amount

Your grandfather put some money in an account for you on the day you were born. You are now 18 years old and are allowed to withdraw the money for the first time. The account currently has $3,996 in it and pays an 8% interest rate. a.How much money would be in the account if you left the money there until your 25th birthday

Time Value of Money: explain it to an 8-year old child with a demonstration

The Time Value of Money Tasks: You have been asked by the local elementary school to come and explain the concept of the time value of money. a) Discuss this topic as you might explain it to an 8-year old child. What would you say? b) What demonstration will you perform to help them understand the topic? Submit though

Time Value of Money- Two alternatives for investment

1. John Smith has received a $1,000,000 gift from his grandmother. Below are two alternatives for investment. Calculate the current value of each. Which investment should John choose and why? A. Invest in a one year government security yielding 5%. B. Invest in real estate with some risk. John has found a piece of prope

Compounding, Time-Value of Money and Retirement Planning

Need some help in writing a 1 page brief explaining compounding, the time value of money, and the importance of retirement planning and investing. Please include the references and please do not copy the references word for word.

Time Required to Accumulate an Amount

You want to buy your dream car, but you are $5,000 short. If you could invest your entire savings of $2,350 at an annual interest of 12%, how long would you have to wait until you have accumulated enough money to buy the car?

TVM, Loan Amortization Schedule, Bonds, and Shares

Problem 1: You plan to retire in exactly 25 years. Your goal is to create a fund that will allow you to receive $55,000 at the end of each year for the 30 years between retirement and death (a psychic told you would die exactly 30 years after you retire). You know that you will be able to earn 11% per year during the 30-year ret

1) If the market interest rates are currently 12%, exactly how much should the lottery invest today, assuming end of year payments, so there will be nothing left in the account after the final payment is made? 2) How much will she have in the account at the end of the seventh year? 3) Assuming that this account pays 8% interest, how much should the year end payments be?

1) Joe won a lottery jackpot that will pay him $12,000 each year for the next ten years. If the market interest rates are currently 12%, exactly how much should the lottery invest today, assuming end of year payments, so there will be nothing left in the account after the final payment is made? 2) Mary just deposited $33,000

Future Value of annual deposits at the end of year 3.

$1,200 is received at the beginning of year 1, $2,200 is received at the beginning of year 2, and $3,300 is received at the beginning of year 3. If these cash flows are deposited at 12 percent, what will be their combined future value at the end of year 3?

Economics help

US paper currency is made with several features that are difficult to counterfeit, including a security thread, color shifting ink, microprinting, a portrait, a watermark and a fine line printing pattern. As duplication technology continually improves and more and more counterfeits are circulated, what will happen to the followi

Investment's present value

10. A real estate investment has the following expected cash flows: Year Cash Flows 1 $10,000 2 25,000 3 50,000 4 35,000 If the discount rate is 8%, what is the investment's present value? $103,7

Mike Polanski's investment: calculate the PV of future salary, FV of savings

Mike Polanski is 30 years of age and his salary next year will be $40,000. Mike forecasts that his salary will increase at a steady rate of 5 percent per annum until his retirement at age 60. a. If the discount rate is 8 percent, what is the PV of these future salary payments? b. If Mike saves 5 percent of his salary each ye

Future Value of an Investment From Today

If 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

Marginal Cost

You are considering expanding your line of equipment and apparel for high school athletic teams to include soccer teams. Based on research conducted by the Marketing department, you estimate an increase in sales for your division of $150,000 per year the first two years, then $250,000 per year over the following three years. In

Present Value

39. The present value of $30,000 to be received in two years, at 12% compounded annually, is (rounded to nearest dollar) ________. $23,916 $37,632 $23,700 $30,000 40. When the market rate of interest was 11%, Welch Corporation issued $100,000, 8%, 10-year bonds that pay interest semi

future training needs

Describe how you would go about analying the future training needs of your current organization.

Present Value of Future Cash Flow

Question 13: A company anticipates a taxable cash receipt of $70,000 in year 5 of a project. The company's tax rate is 30% and its discount rate is 12%. The present value of this future cash flow is closest to: $23,161 $27,783 $29,039 $33,267.

Personal Vision Statement

Need help with Assignment. Pages 61-65 (McNurlin & Sprague, 2004) address the matter of creating a vision. A vision is a statement of how someone wants the future to be or believes it will be. You have been a member of an IS management team that was asked to create a vision for your company. Create and name an imaginary

Future, Present, Future and Present Value

1) If you invest today, how much will you have : a. In 2 years at 9%? b. In 7 years at 12%? c. In 25 years at 14%? c. In 25 years at 14% (compound semiannually)? 2) How much would you have to invest today to receive: a. $15,000 in 8 years at 10%? b. $20,000 in 12 years at 13%? c. $6,000 each years for 10 years at 9%?

Alternatives Using Time Value of Money

Sharon Smith will receive $1 million in 50 years. The discount rate is 14. As an alternative, she can receive $2,000 today. Which should she choose? $1 million dollars in 50 years $2,000 today she should be indifferent need more information

Managerial finance: Time value of money, WACC. Impact the decision to expand.

You estimate an increase in sales of 150,000 per year for the first two years, then 250,000 per year over the following 3 years. You will need to invest in 300,000 worth of new equipment. What is the time value of money and how does it apply in this situation? What is the weighted average cost of capital and how does it impact t