(b) Calculate both total $ payments for the stream of payments, the stream of principal payments, and the stream of interest payments. Also calculate the present value of these 3 streams. [To calculate the present value of interest and principal payments, you will need to use the NPV function, rather than the PV function, since the cash flows in the principal and interest columns are not constant throughout time.] What do you observe when you look at these numbers? Explain.…
Larry calculate the annuity payment, using the discount rate 5% and lump-sum amount as Present values for 26 year then Larry will receive the annuity payment will be equivalent to receiving lump-sum amount.…
The Present Value Formula is P = A(1+r)-n where P is the present value that will amount to A dollars in n years at interest rate r compounded annually.…
The analysis as per the proposal was done for 10years which is the expected economic life of the new factory. At the end of the economic life of the new factory, the cash flow includes the $14 million expected recovery from selling the factory. Time value of money is the concept that an dollar attain today will be valued more than the same dollar attained at a date in the future and can be computed by the following formula 1(1+r)^t.…
Try using your knowledge to earn extra money while at school. Tutoring high school students or other college students can be a great opportunity. It is important to promote yourself as much as possible to bring in…
|Define the time value of money. |The value of money in a given amount of interest earned or inflation accrued over an amount of time. |…
Assume for simplicity that the college payments will be made at the end of years 15, 16, 17, and 18, that is just after each deposit in those years.…
3. You want to save enough money to retire as a millionaire. If you could earn 10% with common stocks, how much would you have to set aside per year to have $1,000,000 when you are 65?…
* b. What would be the future value if the interest rate is a compound interest rate?…
Present value shows that if someone takes the lump sum upfront they will get less than the actual advertised jackpot. This is because the lottery company uses the present value and purchases annuity or bonds that generates interest, which funds future payments. However, if the winner takes an annual payout over about 20-30 years they will receive the full amount. Therefore, to guarantee the full jackpot it seems wiser to take the money over a number of years. Nevertheless, there are issues with that; for example, the winner may need the money now or might believe they can generate a bigger sum over the extended period through an alternative method than the lottery organization uses.…
Time value of money refers to the value of money based on its earning potential. Money received today is more highly valued than money received in the future because of the potential to make money on money. i.e. if I were given 100 dollars today I could immediately invest that money and potentially turn it into 150 dollars in 6 months time versus receiving 100 dollars in six months time.…
Question 1: What is the “time value of money”? Why is money paid or received in the future worth less than comparable amounts today? Does risk have anything to do with this? If so, what?…
Calculate the time you would take to pay the debt – Divide the repayment amount equally over a fixed time period.…
Examine the concept of time value of money in relation to corporate managers. Propose two (2) methods in which time value of money can help corporate managers in general.…
As we all know the history of loans as old as the history of money. Earlier there used to be different mechanism of lending money and recovering it. In simple terms it was the process in which the people who have more money than they required used to give money to people who didn’t had enough. Over the years with the evolution of economics the loan process became extremely important for the people who made business out of it. They used to give loans to people who needed it. But there was always a risk of person defaulting on the loan. For this reason before giving the loan the companies analyses various factors such as the credit history of the borrower, loan period, interest rates, income source etc. in order to prevent any default. In this assignment we are trying to find relation between the interest rates and the various factors like amount, loan length, debt to income ratio, monthly income, FICO score etc.…