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# The Time Value of Money

### What will the stock price be in year 18 given expected future dividend growth rate?

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? 51.48 50.47 55.43 22.45 65.97 66.99

### 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

### Time Value of Money: Amorization, cash flows, effective annual rate, annual payments

1. A \$50,000 loan is to be amortized over 7 years, with annual end-of-year payments. Which of these statements is CORRECT? a. The annual payments would be larger if the interest rate were lower. b. If the loan were amortized over 10 years rather than 7 years, and if the interest rate were the same in either case, the first

### Ford Motor Company: Tips for Improvisation for the Future

Tips and Ideas on where FORD needs improvisation.

### 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

### Forward vs future contract; actions to increase cash; cost of capital to evaluate projects

1) The principal differences between a forward contract and a future contract include all of the following EXCEPT: -A future contract is standardized as to size and terms -A future contract is only good on agricultural commodities -There is an active secondary market in future contracts -Forward contracts can be specifica

### 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,

### Present and Future Value Tables: Maturity Value of CD

Present and future value tables of \$1 at 3% are presented in the attached table. Today, Thomas deposited \$100,000 in a three-year, 12% CD that compounds quarterly. What is the maturity value of the CD?

### 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

### This is an introduction to Project Management. This document will introduce the concept of managing time, money, and resources in relation to a project scope.

This is an introduction to Project Management. This document will introduce the concept of managing time, money, and resources in relation to a project scope. This will explore how changes in resources, time, money, are interrelated and can ultimately effect the project scope. Examples are given of these minor changes that ca

### 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

### People's decisions can affect the money multiplier

Explain how people's decisions can affect the money multiplier and thus the money supply.

### 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.

### Discuss an unsuccessful negotiation situation and suggest ac

Discuss an unsuccessful negotiation situation and suggest actions could have been taken to improve future like negotiations by applying the best practices in negotiations

### Calculating Appropriate Interest Rate

Bill plans to retire in 25 years. He currently has saved up \$200,000, and he believes he will need \$1,000,000 at retirement. What annual interest rate must Bill earn to reach his goal, assuming he does not save any additional funds between now and retirement?

### Significant contemporary issue in health care relevant to current and future generations

Select a significant contemporary issue in health care relevant to current and future generations. The assignment provides you with an opportunity to begin working with the thesis criteria in the Academic Review Checklist. Analyze the effect of the issue on consumers and health care organizations' marketing and propose how t

### Time value of money concepts

Why is a dollar today worth more than a dollar tomorrow? What is an annuity and give some examples. What is the effect of compounding more frequently that once per year? What is the definition of effective annual rate? Comment on the Focus on Practice Question in the chapter titles: New Century Brings Trouble for Subprime

### Solve for the annual compound interest.

On Tims's twenty-sixth birthday, he deposited \$7,500 in a retirement account. Each year thereafter, he deposited \$1,000 more than the previous year. Determine how much was in the account immediately after his thirty-fifth birthday if the account earned annual compound interest of 5 percent?

### Calculate present value of \$300 at beginning of year for 5 years

What is the present value of \$300 received at the beginning of each year for 5 years? Assume that the first payment is not received until the beginning of the third year (thus the last payment is received at the beginning of the 7th year). Assume the discount rate is 10% p.a. Draw timeline(s) to demonstrate your calculations.

### Do Capital Gains equal the present value of future dividends?

Respond to the following: "You say stock price equals the present value of future dividends? That's crazy! All the investors I know are looking for capital gains."

### Present Value of Money.

Joe planned to put his son, John, to a prestigious university called Brain Trust University (BTU) 10 years from now. Currently, total estimated cost (tuition, room and board, books, and other expenses) is about \$60,000 per year. This cost is expected to increase at the average rate of 8% per year for the foreseeable future. It i

### Normal Time, Standard Time for a Task; Incentive Plan

2. A time study was made of an existing job to develop new time standards. A worker was observed for 45 minutes. During that period, 30 units were produced. The analyst rated the worker as performing at a 90 percent performance rate. Allowances in the firm for rest and personal time are 12 percent. a. What is