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    The Time Value of Money

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    Compound interest calculations

    Find the present value of $4,100 under each of the following rates and periods. (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.) a. 8.9 percent compounded monthly for five years. Present value $ b. 6.6 percen

    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

    Present Value at Various Interest Rates

    Wainright Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $ 840 2 1,170 3 1,430 4 1,575 If the discount rate is 9 percent, what is the present value of these cash flows? (Do not round intermediate calcul

    Budgeting for Future Years

    Part of your new accountant's role will be involved with budgeting for future years. So you can understand where she is coming from, so you ask her to talk about the following with you: Explain how revenue sources are planned and budgeted in nonprofits. What are some typical key assumptions that must be made in the "revenue

    Difference Between the PV and FV of an investment

    You just received $225,000 from an insurance settlement. You have decided to set this money aside and invest it for your retirement. Currently, your goal is to retire 25 years from today. How much more will you have in your account on the day you retire if you can earn an average return of 10.5 percent rather than just 8 percent

    Offer Value Per Share and Offer Premium

    Garth's Micro Brewery, whose shares are currently trading at $40 per share, is considering acquiring Wayne's Beer Bottling Co. You have compiled a group of comparable transactions within the beer bottling space and have calculated that since 2004, acquisitions similar (or comparable!) to the one Garth's is currently considering

    Calculations of the Time Value of Money

    1) You invest $20,000 today, at a rate of 10% compound quarterly. What will the investment be worth at the end of year twenty? 2) You are offered an annuity that will pay you $9,000 at the end of each of the next 10 years. What is the maximum amount you would be willing to pay today for this annuity? (Assume you require a

    Equivalent Annual Rate

    I have a discussion that deals with exercises in determining Equivalent Annual Rate (EAR.) This is closely related to the time value of money and deals with how the frequency of compounding of the interest rate affects the value calculation. The result is not the same when interest is compounded quarterly, for example, as it is

    Analyzing Capital Investments

    Visit the website of Johnson Controls Inc. located at http://www.johnsoncontrols.com, and review its 2012 financial forecasts. According to the forecasts, Johnson Controls will increase capital investments to approximately $1.7 billion. More than 70% of the company's capital expenditures in 2012 are associated with growth and

    Discounting future cash flows for impairment

    Please discuss the issues of discounting and not discounting future cash flows for impairment and how it impacts the calculation of impairment as well as how this calculation impacts the balance sheet. Additionally, are there ethical considerations related to discounting of future cash flows for impairment?

    Calculating the interest rates in the given case

    Warren has $2000 today. Using the Time Value of Money equations, not Excel functions, do the following using compound interest: a. Determine the interest rate for Warren if $2,500 is returned one year later. b. Determine the rate if $2,500 will be returned in 5 years?

    Finance: Evaluating Value

    Part I Deliverable Length: 500-700 words Understanding how to properly value a vanilla bond is essential for finance. Find a company with debt and that pays dividends. You can use the following stock screener to find a company: http://www.google.com/finance/stockscreener. Add the criteria of long-term debt to assets to

    Calculate gearing using ordinary share, preference share and debt finacing

    I need guidance on how to calculate gearing using ordinary share, preference share and debt financing and also how to evaluate and make a recommendation on which to use. - Gearing is the relationship between debt and total equity included in the capital structure of a firm. The two items are different due to their characte

    The Time Value of Money in Economic Decisions

    Hi, Please explain why the time value of money is important in an economic decision and how NPV and payback period are used in business to incorporate the time value of money into operational decision. Explain the three basic concepts that are used for estimating the cost of ownership for a single option or in comparing multi

    Calculating Time Value of Money

    Your annual salary is $100,000. Every year for the next 30 years you plan to save 10 percent of your salary and invest it in the stock market at an expected return of 9 percent per year. 1. How much will you have in your account at the end of 30 years if your salary grows at 4 percent per year? 2. How much can you withdraw e

    Time Value of Money: Loan Amortization Schedule

    Mary has decided to borrow $120,000. The terms of the loan are 6% over the next 4 years. She will be making annual payments (not monthly). Construct a loan amortization schedule that shows the 4 payments of Mary's loan.

    Kiddy Toy Corporation: Present Value

    Scenario: Kiddy Toy Corporation needs to acquire the use of a machine to be used in its manufacturing process. The machine needed is manufactured by Lollie Corp. The machine can be used for 10 years and then sold for $10,000 at the end of its useful life. Lollie has presented Kiddy with the following options: 1. Buy machine.

    The Time Value of Money

    1. You have been approved for a $70,000 loan toward the purchase of a new home at 12% interest. The mortgage is for 30 years. How much are the approximately annual payments of the loan? Hint: Assume you pay yearly. 2. First Choice Bank pays 9% APR compounded quarterly on its business loans. National Emerald Bank pays 13% APR c

    Calculating present value and future value

    Find the future value one year from now of a $7,000 investment at a 3 percent annual compound interest rate. Also calculate the future value if the investment is made for two years. FV one year FV two years Sum of FV's Find the future value of $10,000 invested now after five years if the annual interest rate is 8 percent

    Estimating Debit Cost of Capital

    What are the two methods for estimating debit cost of capital, and what do you do when there is default risk? Explain the circumstances in which you would use each method. Give examples.

    Baird Bros. Construction: Time Value of Money

    Baird Bros. Construction is considering the purchase of a machine at a cost of $125,000. The machine is expected to generate cash flows of $20,000 per year for ten years and can be sold at the end of ten years for $10,000. Interest is at 10%. Assume the machine would be paid for on the first day of year one, but that all other c

    Fundamental Economic Questions

    My son has just started his college career with a major in economics. He is curious as to the interrelationship between the success of an economy and the financial markets, concepts, and financial institutions. Accordingly, he has developed a list of questions addressing these issues. What are the financial markets and what p

    Time Value of Money: Taking a Risk

    Time Value of Money: Time Value of Money is one of the most important concepts in the financial world. The principles of time value analysis have many applications, ranging from setting up schedules for paying off loans to decisions about whether to acquire new equipment for a company. Time value of money is also called discount

    Time Value of Money Definitions

    As a financial manager you will often have to compare cash payments which occur at different dates. To make optimal decisions, you must understand the relationship between a dollar today [present value] and a dollar in the future [future value]. Future value is the amount to which an investment will grow after earning interes

    Problem Set : TVM Concepts

    1. (Monthly compounding) If you bought a $1,000 face value CD that matured in nine months, and which was advertised as paying 9% annual interest, compounded monthly, how much would you receive when you cashed in your CD at maturity? 2. (Annualizing a monthly rate) You credit card statement says that you will be charged 1.0

    The Future of Managed Care: based on a comparison to traditional healthcare delivery systems using cost, quality, and access to care. It also includes a comparison to healthcare in another country.

    Describe what you see as the future of managed care. Base your assessment on a comparison to traditional healthcare delivery systems using cost, quality, and access to care. Include a brief section that provides a comparison with a care system in another country. Feel free to use your previous evaluation of managed care models,

    Future Quotes

    Please refer to the attached chart. Suppose you sell nine March 2009 silver futures contracts on February 12, 2009, at the last price of the day. Question: (a) What will your profit or loss be if silver prices turn out to be $14.61 per ounce at expiration? Input the amount as positive value. Round your answer to the nearest