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The Time Value of Money

Time Value of Money using Excel for Ashley Cambry's retirement income

Ashley Cambry is planning for her retirement. She already has $12,500 in a retirement plan and will deposit $500 a month for the next 20 years. Her account manger says she will be earning 8.00% on an annual basis on this account at the time of retirement and Ashley plans to withdraw a sum each month during her 15 retiremen

Time value of money and annuties; cost of capital, valuation of a financial asset

What is the "time value of money" and how does it affect a financial manager's decision regarding cash flows? What is an annuity? Why might annuities be useful to a corporation? In computing the cost of capital, do we use the historical costs of existing debt and equity or the current costs as determined in the market? Why

Calculate Payback Period, Return on Average Investment, NPV

The problem is attached in the file titled "Problem".. It consists of 2 parts, 1st part is calculations and the 2nd part is a short response. The file titled "Tables" consists of two tables which have to be used, when needed, to help calculate part 1 of the problem. This is the only method that can be used with calculations,

Time Value of Money: Basic Concepts in Finance

You currently receive $10,000 per year on an annuity contract. It will expire in 8 years. Someone wants to buy the contract from you. If you can earn 12% on other investments of the same quality and risk, how much would you be willing to sell the contract for? You can insulate your home for $7,500. You figure you can save 15

Supply and Demand for Investment Capital

California clinics, an investor-owned chain of ambulatory care clinics, just paid a dividend of $2 per share. The firm's dividend is expected to grow at a constant rate of 5% per year, and investors require a 15% rate of return on the stock. 1. Explain how each of the four fundamental factors that affect the supply & demand f

Checkout Time - Retail Formats

In terms of checkout time, does one retail format have a sustainable advantage relative to other retail formats? I understand what a sustainable advantage is, but am having difficulty explaining how Wal-Mart compares to other retail formats.

Can a company record a provision for future losses in the current year?

Company A has experienced a great year of sales growth and profitability. However, due to the economy downturn, the CEO forecasts that the company will incur operating losses in 2 of its major businesses next year. He proposed that the company record a provision for these future losses this year, since it can afford to take the

Financial Management - Time Value of Money

1.How are compounding and discounting related? please describe what compounding is. Also, describe what discounting is. Feel free to provide examples. 2.Describe time value of money. What is it? How do we use it? Please analyze the question and provide examples.

Calculate the time needed to save.

After doing some budgeting, you estimate you'll need to save $25,000 for the first year of graduate school. You plan to save $450 per month in an account that earns 7% compounded monthly. How long will it take you to save the money you need? 4.02 years 3.73 years 44.66 years 5.36 years 3.94 years 48.24 years

How much money will you have 9 years from now?

You deposit $300 today, $500 one year from now, and $600 four years from now into an account that earns 6% compounded annually. How much money will you have 9 years from now? $2,106 $1,822 $2,292 $1,871 $ 1,181 $2,025

What will the stock price be in year 18?

A company has announced the growth rate of its dividend going forward will be 2% annually forever. The dividend in year 4 will be $3.00. The discount rate on the stock is 10%. What will the stock price be in year 18?

Daily Tribune impairment test of its printing press

The Daily Tribune is performing an impairment test of its printing press as of December 31, 200X, and estimates that the press will generate net cash flows of $8,000 per year for the next 4 years. The Daily Tribune anticipates a 6% discount rate. Based on discounted future cash flows, which of the following is closest to the fai

Present value calculation problem

You charged $2400 on your credit card for holiday gifts. Your credit card company charges you 8% annual interest, compounded monthly. If you make the minimum payments of $75 per month, how long will it take (to the nearest month) to pay off your balance? Answer 80 months 48 months 24 months 36 months

Time value of money exercises using Excel: PV, FV, annuity, stream of cash flows

4-1 If you deposit $10,000 in a bank that pays 10% interest annually, how much will be in your account after 5 years. 4-2 What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually? 4-3 Your parents will retire in 18 years. They currently have $250,000 and they t

Present Value of Bank Account & of Gold Mine Stream of Payments

Calculate present value. A. Suppose your bank account will be worth $15,000.00 in one year. The interest rate (discount rate) that the bank pays is 7%. What is the present value of your bank account today? What would the present value of the account be if the discount rate is only 4%? B. Suppose you have two bank accounts,

You're trying to save to buy a new $170,000 Ferrari. If you believe that your mutual fund will achieve a 12% per year rate of return, and you want to buy the car for your birthday in 9 years...

1. You are scheduled to receive $20,000 in two years. When you receive it, you will invest it for six more years at 8.4% per year. How much will you have in eight years? (Question #19 from page 143 of your text) 2. You expect to receive $10,000 in two years. You plan on investing it at 11% until you have $75,000. How long w

Simple and Compound Interest

1) We put $500 into a bank account that has a stated interest rate of 6.2%. Our account pays simple interest and we will not deposit or withdraw any money; how much money would our group have in our bank account after five years? 655, 620, 625, 630 or 635? 2) If our bank account earn as compound interest how much would we

Prepare a Balance Sheet, Income Statement, Cash Flows, TVM

See attached file for proper format. Consider the following financial data for a company (all figures in thousands of dollars except stock price and # of shares): Balance Sheet Data 12/31/2010 12/31/2009 Cash & Equivalents 500 100 Accounts Receivable 220 200 Inventories 1,000

Finance: Ratios, inventory turnover, cash on hand, TVM, zero-balance accounts

QPAC Computer has net working capital of $1,000; current liabilities of $8,000; and inventory of $1,500. a. What is the current ratio? b. What is the quick ratio? Alberto Corporation has ending inventory of $750,000, and cost of goods sold for the year just ended was $2,950,000. a. What is the inventory turnover?

If a firm's required return were 0 percent, would the time value of money matter? As these returns rise above 0 percent, what impact would the increasing returns have on future value? Present value? I wonder if this is even possible. It seems like nearly everything goes up in value over time. Is anyone able to give an example of something that would meet this description? A service oriented company maybe?

If a firm's required return were 0 percent, would the time value of money matter? As these returns rise above 0 percent, what impact would the increasing returns have on future value? Present value? I wonder if this is even possible. It seems like nearly everything goes up in value over time. Is anyone able to give an ex

Discussing Future Training and Development Problems

Consider what future skills may be needed in your organization. I do not have an organization/job to discuss of my own, so my instructor suggested I get an opinion from someone who could help me with this. Listed below are some of the future skills we are to pick from if they pertain to the organization. 1. Delivering a

A company invests considerable time and money to develop sophisticated cost functions that rate high on all evaluative criteria. In the course of using the cost functions, a manager notes that in several instances the actual costs were different from the predicted costs, resulting in lower profits during one quarter of the year. The question of the value of the cost function is asked. Give some suggestions on how to answer the manager.

A company invests considerable time and money to develop sophisticated cost functions that rate high on all evaluative criteria. In the course of using the cost functions, a manager notes that in several instances the actual costs were different from the predicted costs, resulting in lower profits during one quarter of the year.

Finance

You want to go to Europe 5 years from now, and you can save $3,100 per year, beginning one year from today. You plan to deposit the funds in a mutual fund that you think will return 8.5% per year. Under these conditions, how much would you have just after you make the 5th deposit, 5 years from now? a. $18,369 b. $19,287 c.