Explore BrainMass

Explore BrainMass

    The Time Value of Money

    BrainMass Solutions Available for Instant Download

    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

    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?