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The Time Value of Money

Time Value of Money Definition and Several Calculations

I am having problems understanding the concepts and mathematical formulas of time value of money especially future value, present value and etc... 1. Provide a definition of time value of money. 2. To what extent is it important for financial managers to understand the concept of time value of money? Why? Please explain your

Advance Auto Parts, Inc. Profile and Vital Financial Information

Advance Auto Parts AAP Search Advance Auto Parts website and find the section called "Investor Relations" to obtain the financial information of the company over the past several years. Answer the following questions: 1. Provide a brief description of the Advance Auto Parts Inc, its main business and operational activitie

Shareholder's Wealth and Corporate Governance

a. If the goal of a firm is to maximize the shareholders' wealth, does it mean profit is not important at all? Explain your answer. b. What are the advantages and disadvantages of the three principal forms of business organization? c. Briefly explain the term "agency costs" as related to a corporation. How can agency problem

Components in Calculating the Time Value of Money

All answers should be in a single Excel file. Show the step by step calculations how it was done and explained thoroughly by using excel: 1 If you deposit $15,000 today and earn 8% annual interest, how much will you have in 9 years? Answer: $29,985.07 2 Tiffany will receive a graduation gift of $10,000 from her pare

Basic Concepts of Financial Computations

I have two attachments I need help with. They are various financial computations. In addition to solving the problems, I need to show the formula used to get the correct answer.

AutoEdge Expansion and Net Present Value Analysis

Over lunch, you and Lester meet to discuss your next assignment. "The board of directors has been working on the cost and benefits of various expansion options," he says. "We have developed the numbers for one scenario in this spreadsheet, and we want you to review it," he says handing it to you. "So you're looking for me

sales revenue

After receiving the quarterly reports from all the departments within the hotel you are managing, you notice that the hotel's bar operation has had declining cash sales revenue steadily throughout the quarter. You begin to suspect that some of the employees in the bar may not have been reporting these sales and keeping the cash

Straight Line Deprecation and Double Declining Depreciation

Hello I am having issues with the below problems, if you can kindly help and advise your approach to figuring out the solutions. Thank you, QUESTION ONE - On January 1, 2008, Nobel Corporation acquired machinery at a cost of $600,000. Nobel adopted the straight-line method of depreciation for this machine and had be

Time Value of Money Utilizing the Present Worth Calculation

The city bridge inspection team had noted 4 bridges that need replacement. Resources are available to do one of these. Proposals to repair them have been received as follows. Also shown are the number of vehicles per year that use each bridge that is an indicator of the size of the problem if the bridge would fail. Using a

Performing a Financial Analysis - Calculating the NPV

Please see the attached file for the full problem instructions. All formulas used need to be in excel so that when the cell is highlighted, the formula used can be seen. The nonprofit Center for Original Oxygen (CO2) has decided to concentrate its efforts to a particular means of reducing carbon dioxide thereby enabling

Present Value of Growing Annuity vs Ordinary Annuity

The city of Cincinnati gave up the right to collect parking fees over a 30-year period in exchange for a lump sum of $92 million plus a 30-year annuity of $3 million. Suppose that if the city had not entered into that arrangement, it would have collected parking fees the following year of $6 million (net of operating costs), and

How transfer pricing impacts performance measures

Please comment on transfer pricing issues and measures for performance evaluations and the importance of these issues, how they are related and why they are very important in the business environment.

Financial Concepts-Portfolio Theory, CAPM Homework

Financial Concepts Portfolio Theory, CAPM Homework Homework Exercise 8 Rate of Return Year Asset A Asset B Market 1 20.0% 19.0% 9.0% 2 -11.0% 22.0% 12.0% 3 10.0% -6.0% 6.0% 4 -9.0% -14.0% -4.0% 5 21.0% 28.0% 17.0% For this exercise, you might want to copy and paste the table above into Excel and then do all your

Time Value of Money

Note: Unless otherwise stated, assume that interest is calculated on an annual basis 1) Ian invests $1000 today in a 3 year CD paying 3.75% annually. He receives the full amount of principal and accrued interest in 3 years. How much will he receive in 2 years? N i PV PMT FV 2) How much would Sylvia have to

Value of Financial Instrument

Assume the following data: Current assets = 500; Current liabilities = 250; Inventory = 200; Account receivables = 200. Calculate the current ratio. a) 2.0 b) 1.5 c) 1.0 d) 2.5 Assets are listed on the balance sheet in order of: I) decreasing liquidity; II) decreasing size; III) increasing size; IV) r

Future Value Calculation and Annuities

Your parents are planning to retire in 18 years. They currently have $250,000. They supplement those dollars with an annual payment into a retirement account of $20,000. What will be the value of all dollars if the funds can earn an interest rate of 5%? What will be the value of all dollars if the funds can earn an interest

Calculating NPV and IRR for Investments

An investment requires an outflow of $300,000 at time zero and another outflow of $60,000 at the end of the first year. Net after-tax inflows for years 2, 3 and 4 are zero. After tax inflows in years 5, 6 and 7 are $60,000, $400,000 and $400,000, respectively. The required rate of return is 17%. What is the Net Present Value of

Cost of equity of Nike, Sony Corporation, and McDonald's Corporation

The cost of equity (discount rate) can also be determined by using the Capital Asset Pricing Model (CAPM). Calculating the cost of equity using the CAPM model is often more difficult than using the dividend discount model. The companies' financial statements do not show the cost of equity. The following table shows necessary

Online Car Buying and Time Value of Money

Can you please help me with the following scenario? Thank you! With a click of the mouse, Mackenzie enters the auto "showroom." In the past few months she had realized that the repair costs for her 11-year-old car were accelerating. She thought it was time to start shopping for a new car online and decided to start her Inte

Value of Equity - Bart Company

Bart Industries is about to be purchased by Kramer Enterprises. Both firms are in the rocks and mineral industry. As one of the founders of Bart Industries, you are concerned about the value of the equity in the firm. You have acquired the following data on your firm: 1. Bart has 200,000 shares of stock authorized, with 12

Coping with Identity Theft

Don't Let Crooks Steal Your Identity: How to Protect Yourself—and Your Credit Rating In 2009 Consumer Sentinel, the complaint database developed and maintained by the Federal Trade Commission, received over 1.3 million consumer fraud and identity theft complaints. Consumers reported losses from fraud of more than $1.7 bi

Career Improvment

Which Job? Are You Sure? "Wow, you mean you have three job offers? How did that happen?" "I'm not quite sure, Joan," responded Alexia. "I guess I just carefully prepared for my job search." "Ahhh . . . could you be a bit more specific for those of us who have no job offers?" asked Joan. "After researching various organizations,

Creating a NPV & IRR Spreadsheet

Suppose you own a concession stand that sells hot dogs, peanuts, popcorn, and beer at a ball park. You have three years left on the contract with the ball park, and you do not expect it to be renewed. Long lines limit sales and profits. You have developed four different proposals to reduce the lines and increase profits. The

econmcs: Time value of money

4. Keeshawn invests $20,000 in a stock fund that has been paying 8% compounded quarterly for the past 10 years. Assuming that the fund continues to perform as it has for the past 10 years, how long will it take for Keeshawn's money to double? 5. Willie plans to invest $4,000 in a bond fund that has been returning 7% compound a

Calculating fixed and variable cost

In a slow year, Deutsche Burgers will produce 2.0 million hamburgers at a total cost of $4.4 million. In a good year, it can produce 4.4 million hamburgers at a total cost of $5.0 million. What are the variable and fixed costs of hamburger production? (Enter your answers in dollars not in millions. Round "Variable cost" to 2 dec

Economic Variables: Average Income

This is the first component that discusses the decision-making process of monetary policy and analyzes how a particular recommended policy will affect the U.S. economy. In this Part 1, you will collect data and information about the current economy and submit a short background report in a document in three to five pages.

Calculating future and present values of ordinary annuities

Problem 1 If interest rates are 8 percent, what is the future value of a $400 annuity payment over six years? Unless otherwise directed, assume annual compounding periods. - Recalculate the future value at 6 percent interest and 9 percent interest. Problem 2 If interest rates are 5 percent, what is the present value of a

Archer Daniels MIdland Company Purchase

Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12.10 million. This investment will consist of $2.90 million for land and $9.20 million for trucks and other equipment. The land, all trucks, and all other equipment is expected t

Time value of Money, capital budgeting, audit report

Question 1 Indicate whether the following are true or false and briefly motivate your answer. a) Time value of money is equal to inflation plus interest b) Fixed cost remains the same even if variable cost and production increase. c) High risk financial instruments are likely to generate high returns d) Annualised compoundi

Time Value of Money: Future and Present Value, Payment Amounts, Interest Rates

For the below time value of money problems, complete using formulas in Excel on each separate tab. Mention any assumptions and support each decision made. Question One: You deposited $15,000 today and the interest rate is 8% annually. How much will you have in nine years? Question Two: Tiff will receive a graduation gi