Share
Explore BrainMass

The Time Value of Money

Calculating present and future values..

Q12 What is the economic value today of each of the following payment streams if money can earn 7.5%. a. $1000, $3000, and $2000 due in one, three, and five months, respectively. b. Two $3000 payments due two and four months from now. Q14 Ninety days ago Stella signed an agreement with Manon requiring her to make three

Calculating Net Worth per Share: Hoover Inc. Example

Question: Hoover Inc. has current assets of $360,000 and fixed assets of $640,000. Current liabilities are $90,000 and long-term liabilities are $160,000. There is $90,000 in preferred stock outstanding and the firm has issued 10,000 shares of common stock. Compute the book value (net worth) per share.

Time Value of Money

A1. (PV and FV of single payments) Fill in the missing information: PV FV r n a. - 20 10% 10 b. 10 - 10% 10 c. 10 20 - 10 d. 10 20 10% - A2. (PV and FV of single payments) Fill in the missing information: PV FV r

Economic Future

Larson Inc. Larson Inc. is an international company that has operated in America for 5 years and in Germany for over 15 years. The company supplies batteries for electronic equipment. Batteries are sold for anything from laptops to toys. The company has always maintained a decentralized structure regarding decisions in the ar

Time Value of Money: Example

1.) You need $25,000 today and have decided to take out a loan at 7 percent for five years. Which one of the following loans would be the least expensive? Assume all loans require monthly payments and that interest is compounded on a monthly basis. 2.) You grandfather won a lottery years ago. The value of his winnings at the

Liability Insurance Policy

4. If a firm wants to have $1 million in cash available in three years, how much must it invest now at an 8 percent interest rate? 5. An insured has the following four liability insurance policies: $300,000 with insurer A, $300,000 with insurer B, $700,000 with insurer C, and $900,000 with insurer D. Each policy apportions l

Time value of money

P4-11 Present Values. For each of the cases shown in the following table, calculate the present value of the cash flow, discounting at the rate given and assuming that the cash flow is received at the end of the period noted. Case Single Cash flow Discount rate End of period (years) A $7000

Time value of money

Problem 1 Paul wants to save money for his son's education and for his own retirement. His son jimmy. Who is now 10 yrs old will need $25,000 a year for 4 yrs when he starts college 8 yrs from now. Paul, who is now 40 yrs old, he plans to retire at 60 years of age with an annual retirement income of $60,000 a year and he expec

Calculating Annual Rate of Return

Three years ago, Frank signed a 5 year promissory note for $10,000 plus interest at 12% compounded monthly. a) Helen is willing to pay $13,000 for the note. Calculate Helen's annual rate of return compounded quarterly?

case problem

you have applied for a job at a local bank. as part of its evaluation process, you must take an examination on time value of money analysis covering the following... b. 1) whats the future value of $100 after 3 years if it earns 10% annual compounding? 2) whats the present value of $100 to be received in 3 years if the

Time Value of Money Concepts

Problem 4.4 For each of the cases shown in the following table, calculate the future value of single cash flow deposited today that will be available at the end of the deposit period if the interest is compounded annually at the rate specified over the given period. Case Single Cash Flow Interest Rate Deposit

Time Value of Money

1.) Sue and Neal are twins. Sue invests $5,000 at 7 percent when she is 25 years old. Neal invests $5,000 at 7 percent when he is 30 years old. Both investments compound interest annually. Both Sue and Neal retire at age 60. Which one of the following statements is correct assuming that neither Sue nor Neal has withdrawn any mon

Time Value of Money

You can insulate your home for $7,500. You figure you can save 15% per year on your heating bill if you insulate. Your home was bought 10 years ago for $45,500. You figure real estate prices have gone up 16% each year. You plan to live in the house another 10 years. Your home has five bedrooms, 2,500 square feet and requires 5,5

Time Value of Money: eBay

Time Value of Money Your task for this module is to apply the concept of present value to eBay. Suppose eBay is selling a bond that will pay you $1000 in one year from today. Keep in mind that if your company has financial difficulties in one year you might not get your full $1000 back. Given that a dollar one year from no

Finance: Warrant, contracts, conversion, premium, basic EPS, derivative, option

See attached file. Question 1 Warrants are long-term options to sell shares of the issuing firm's stock. fairly stable, low-risk investments. investments whose value is directly related to the price of the underlying stock. structured to sell for precisely their intrinsic value. Question 2 A contract giving the owne

Time Value of Money Problems

Please help me understand what type of specific TVM problem each of the problems from 1 to 10 are and give the formulas required to solve each. l will work out the calculations. For problems 11 and 12, please help me see the work for the complete problem including the calculations and everything. 1. First Bank and Trust of

Present value of three pension plans

Juanita Martinez is ready to retire and has a choice of three pension plans. Plan A provides for an immediate cash payment of $200,000. Plan B provides for the payment of $20,000 per year for 10 years and the payment of $200,000 at the end of year 10. Plan C will pay $35,000 per year for 10 years. Juanita Martinez d

Discuss the changing factors that will influence business in the future

Discuss the changing factors that will influence business in the future (e.g., new investment techniques, new forms of communication, new management structure, new technology, and new marketing techniques). Explain in detail the factor that was chosen. Discuss any additional ideas that you may have about how future business wi

Time value of money

Find the present value and the amount of interest earned. Use the present value of a dollar table. Round to the nearest cent as needed. Amount needed $11,200 Time (years) 10 Interest 4% Compounded semiannually Present value $ ____

Time value of money

Find the present value and the amount of interest earned. Use the present value of a dollar table. Round to the nearest cent as needed. Amount needed $12,900 Time (years) 6 Interest 8% Compounded annually Present value $ ____________ Interest earned $____________

Present Value of Bonds and Time Value of Money

Apply the concept of present value to Accuracy. Suppose Accuracy is selling a bond that will pay you $1000 in one year from today. Keep in mind that if Accuracy has financial difficulties in one year you might not get your full $1000 back. Given that a dollar one year from now is always worth less than a dollar today, you most

Factor in different future and present values

Which factor would be greater: the present value of $1 for 10 periods at 8% per period or the future value of $1 for 10 periods at 8% per period? a. Future value of $1 for 10 periods at 8% per period. b. Present value of $1 for 10 periods at 8% per period. c. The factors are the same. d. Need more information

Chief financial officer must evaluate finances for departments

1. A chief financial officer must evaluate finances for all departments, and create a budget that will include capital expenditures, investments, and future revenues. Define the difference between forecasting and budgeting. What is the difference between an operating budget and a cash budget? 2. How do you explain the use

Financial Management

Al Corbin is 25 years old today and he wishes to accumulate enough money over the next 35 years to provide for a 20 year retirement annuity of $100,000 at the beginning of each year, starting with his 60th birthday. He can save $2,000 at the end of each of the next 10 years and $3,000 each year for the following 10 years. How mu

Value of XYZ share

XYZ has debt of 32,500,000 and is expected to produce FCF of 9,500,000 next year. How do I calculate the value of a share of XYZ if the company has 10 million shares outstanding, FCF is expected to grow at 3.5% per year, and the company required return is 14.5%?

Time value of money: annuity, yield to maturity of bonds

1. Paul Bearer may elect to take a lump-sum payment of $25,000 from his insurance policy or an annuity of $3,200 annually as long as he lives. How long must Paul anticipate living for the annuity to be preferable to a lump sum if his opportunity rate is 8%? a) Approximately 8 years b) Approximately 10 years c) Approximately

Finance

You are saving for the college education of your two children. They are two years apart in age; one will begin college 15 years from today and the other will begin 17 years from today. You estimate your children's college expenses to be $21,000 per year per child, payable at the end of each school year. The annual interest rate

Superannuation: Defined Benefit versus Accumulation Fund

What is the difference between inflation and the 'time value of money'? Please explain what issues relating to the concept of the 'time value of money' might be important when choosing between a defined benefit or an accumulation super fund. Are all defined benefits calculated the same way? I have been given an equation o

Financial Accounting

A. After a protracted legal case, Joe won a settlement that will pay him $11,000 each year at the end of the year for the next ten years. If the market interest rates are currently 5%, exactly how much should the court invest today, assuming end of year payments, so there will be nothing left in the account after the final payme