000/1.06 PV = $1‚150‚943 Yes‚ she should still make the investment as it will net her $1‚150‚000. 5. Assuming both are rational‚ it is in the best interest of both the savers and the spenders to invest $3 million in the restaurant. While the savers are likely to reinvest their earnings from the investment‚ the spenders would take out a loan in the amount of their share of the future value of the investment less the interest rate allowing them to
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Virginia should still invest $3M in the restaurant. That is the optimal investment‚ which pays>6% per incremental $1M investment. 5. Savers and Spenders have different characteristics. What would each group want to do‚ andwill they reach a compromise?To invest $3M would optimize the future value and also the current value of the company.Hence‚ both savers and spenders would be happy with that option. 6. Should Ginny invest in the Smoked ham business? Assuming she has cash from theinvestment made
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Case Study: Ginny’s Restaurant Team 6 1a. What is Vrginia’s current weath? Cash today Cash in one year Interest Net Present Value $2‚000‚000 $3‚000‚000 6% (NPV) = $2M + $3M/ (1+0.06) = $4‚830‚188.68 Virginia’s current wealth is made up of her $2 million in had and the present value of her future $3 million. 1b. How much can Virginia spend today? Without a loan If Virginia does not want to borrow from the bank‚ she can spend a maximum of $2 million. With a loan If Virginia makes use of a bank
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earning money is the main purpose of living rather than enjoyment. Consequently‚ it always takes us a lot of effort to persuade him for a trip to any places with our family during the holidays‚ including his birthday. My father is more of a saver than a spender. My mother‚ on the other hand‚ has a view that one should enjoy his life at the same time he works. For her‚ earning money is an endless process and money is earned to spend. It is silly to earn a lot of
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Personal Budget Do you love to budget? Do you expect to make a personal budget for the next month? Do you look forward to boasting of your budget to you friends?The answer is yes. Also I want to become a saver‚ a British economist Mr. Martin told us“the best way to save money is to have a budget that you stick to”.I established a 6 month forecasted budget for the period November 2013- April 2014. First of all‚ I want to emphasize thatI am an international student and my parents provide me ￡700cost
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“She’s a college freshman with a new BMW and she went into debt for it!” said Rachel Cruze at the beginning of her financial planning workshop at Texas A&M University-Commerce. She was politely describing the reckless spending that is prevalent among college students‚ and came to our university to raise awareness concerning the major debt crises among her young audience. She came to the university on October 11‚ and stood on stage in the Ferguson Auditorium to give college students‚ and other individuals
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FINTMED CLASSROOM NOTES FINANCIAL INTERMEDIARY * a middleman between people who needs capital and people who has capital * Institutions that matches lenders and borrowers TOPICS: (for the whole term) OVERVIEW | INTEREST RATES | BANKS | COLLATERAL AND CREDIT RISK MANAGEMENT | NON-DEPOSITORY FINANCIAL INSTITUTION | BANK CAPITAL AND DEPOSIT INSURANCE | * Insurance firms | BANK RUNS AND CONTAGIONS | * Securities firms | BOND MARKETS | * Investment firms | EQUITY MARKETS
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Sociology Imagination is history‚ biography‚ and the relationship it has between each other an on society. Without understand one completely‚ you would not be able to understand everything in a whole. I believe that each human being has traits and culture diversities that put them into different groups within a society. These groups then have different issues that interact with other groups that create public issues. These public issues in return help create history. I also see where history plays
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helps to solve and reduce market imperfections. Asset transformation theory deals with difference in the preferences of lenders and borrowers. Lenders also known as savers‚ prefers to have low risk and short term claims with high interest income. The deposits from lenders tend to be in small amount. Borrowers also known as spenders‚ prefers to have long term claims with low interest payment. The loans are usually in large amount that are risky due to the nature of business. Financial intermediaries
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1- Banks perform the indispensable task of… A: intermediating savers and spenders. 2- Among the most important trends in banking‚ there have been… A: increase in bank branching‚ formation of more holding companies for the purchase of smaller banks‚ and mergers among the larger banks in the industry. 3- Among leading structural trends in the recent banking industry‚ there have been… A: Decline in independently owned banks‚ increase in the average size of individually owned banks‚ and entry
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