Time value of money Essays & Research Papers

Best Time value of money Essays

  • Time Value of Money - 1397 Words
    TIME VALUE OF MONEY Time value of money is useful in making informed business decisions. For example the "net present value method" can be used to help decide the best alternative among multiple alternative uses of a firm or personal financial resources. By discounting various alternatives to their "present value" one can compare the alternatives. Time value of money can also answer such questions as what one's investment will be worth at a certain point of time in the future, assuming...
    1,397 Words | 6 Pages
  • time value of money - 2076 Words
    Gayle M. Doria Finance21 Prof. Khen Enriquez This article will explain the financial concept of time value of money. The overview provides an introduction to the principles at work when money grows in value over time. These principles include future value of money, present value of money, simple interest and compound interest. In addition, other concepts that relate to factors that can impede the growth in value of money over time are explained, including risk, inflation and...
    2,076 Words | 6 Pages
  • Questionnaire: Time Value Money
    Fin 3322 Time Value of Money Homework 1. Your local travel agent is advertising an extravagant global vacation. The package deal requires that you pay $5,000 today, $15,000 one year from today, and a final payment of $25,000 on the day you leave two years from today. What is the cost of this vacation in today’s dollars if the discount rate is 6%? 2. The tax rates are as shown. Your firm currently has taxable income of $79,000. How much additional tax will you owe if you increase your...
    701 Words | 3 Pages
  • Time Value of Money - 1431 Words
    Introduction The time value of money is an important concept in financial management. It can be used to compare investment alternatives and to solve problems involving loans, mortgages, leases, savings, and annuities. The time value of money can be defined as the value of money received today instead of in the future. This is based on the premise that cash in hand today is more valuable than the same amount in the future due to its capability of earning interest. For investors, this is single...
    1,431 Words | 5 Pages
  • All Time value of money Essays

  • Time Value Money Example
    TVM Numericals for practice 1. Calculate the FV of a sum of rs 1000/-invested for 3 years. The rate of interest is 10%. ( Ans 1331/- SNM ) 2. Calculate the FV ( compounded value ), if rs 1000/- is compounded @ 10% p.a semi-annually for 3 years. ( Ans 1340/-,SNM ) 3. Mr investor invests rs 500/- , rs 1000/- and rs 2000/- at the end of each year . Calculate the compound value at the end of 3 years compounded annually when interest is charged at 10% p.a. ( ansrs 3705 /-,SNM ) 4. Find the...
    276 Words | 1 Page
  • The Time Value of Money - 264 Words
    Financial mangers make decisions today that will affect the firm in the future. The dollars used for investment expenditures made today are different from the cash flows to be realized in the future. What are these differences? What are some of the techniques that can be used to adjust for these differences? When it comes to understanding the difference between finances today and finances in the future, it is important to understand Time Value of Money. The Time Value of Money shows that...
    264 Words | 1 Page
  • Time Value of Money - 1020 Words
    Abstract In this paper, Team C will discuss the concept of the time value of money and the importance of this concept in business. Also, we will provide a demonstration of the use of the formula used to calculate the present and future values of money to get the present value of $100 using different periods of time and interest rates. Time Value of Money In the world of business, it is essential to know what TVM represents and how it helps make better choices in how we spend our money....
    1,020 Words | 3 Pages
  • Time Value of Money - 2104 Words
    Time Value of Money The time value of money (TVM) or, discounted present value, is one of the basic concepts of finance and was developed by Leonardo Fibonacci in 1202. The time value of money (TVM) is based on the premise that one will prefer to receive a certain amount of money today than the same amount in the future, all else equal. As a result, when one deposits money in a bank account, one demands (and earns) interest. Money received today is more valuable than money received in the...
    2,104 Words | 5 Pages
  • Time Value of Money - 761 Words
    Time Value of Money “Money has a time value associated with it and therefore a dollar received today is worth more than a dollar to be received in the future” (Block, Hirt, 2005). The time value of money may be based on the concept that one would prefer to receive a fixed payment today rather than the same fixed payment at a future date. This paper discusses some of the key components of time value of money and identifies the application of time value of money in various businesses....
    761 Words | 3 Pages
  • time value money - 1053 Words
     Running head: STRATEGIC CORPORATE FINANCE STRATEGIC CORPORATE FINANCE TIME VALUE OF MONEY The aim of this paper is to learn about time-value-of-money to make optimal decisions as manger must understand the relationship between a dollars present today and a dollar in the future. Time value of money Today’s financial managers often have to compare cash payments that occur on different dates. To make optimal decisions, the manager must understand...
    1,053 Words | 4 Pages
  • Time Value of Money - 322 Words
    Time value of money, is exactly how it sounds. Time can determine the value of your money in aspects of Present Value (PV) and Future Value (FV). Present value is what your money is worth at the present point in time that you acquire it. Future value is what your money will be worth if you accrue interest over time. Equations for both are as follows. FV= PV (1 + i) ^n, PV= FV (1+i) ^ -n. Examples of both; you get $15,000 now or $15,000 in three years. If you take the $15k now and put it...
    322 Words | 1 Page
  • Time Value of Money - 1394 Words
    Running Head: TIME VALUE OF MONEY Time Value of Money Team C: University of Phoenix MBA 503: Introduction to Finance and Accounting Time value of money is the concept that an amount of money in one's possession is worth more than that same amount of money promised in the future (Garrison, 2006). Today money can be invested to earn interest and therefore will be worth more in the future (Brealey, Myers, & Marcus, 2004). This paper will explain how annuities affect time value of...
    1,394 Words | 4 Pages
  • Time Value of Money Analysis
    5-42 Integrated Case Time Value of Money Analysis. You have applied for a job with a local bank. As part of its evaluation process, you must take an examination on time value of money analysis covering the following questions: a. Draw time lines for (1) a $100 lump sum cash flow at the end of Year 2; (2) an ordinary annuity of $100 per year for 3 years; and (3) an uneven cash flow stream of -$50, $100, $75 and $50 at the end of Years 0 through 3. (1) 100 0 1 2 100 0 1 2 (2)...
    1,394 Words | 8 Pages
  • Time Value Of Money - 1548 Words
     Time Value Of Money Rawand Ibrahim Florida State College At Jacksonville Dr. Daniel J. Mashevsky FIN4501-Investment Management Table of Contents Introduction 2 Components of interest rate 3 Stocks and Bonds 4 Interest rate 4 Future Value 5 Determining Present Value 6 Conclusion 6 Reference: 7 Introduction What is the time value of money? (Campbell Harvey, 2012) “Time value of money is initially defined as the concept that money available at the present time is...
    1,548 Words | 5 Pages
  • Time Value of Money - 631 Words
    Sample Problems—Time Value of Money 1. Gomez Electronics needs to arrange financing for its expansion program. Bank A offers to lend Gomez the required funds on a loan where interest must be paid monthly, and the quoted annual rate is 8 percent. Bank B will charge 9 percent, with interest due at the end of the year. What is the difference in the effective annual rates charges by the two banks? 2. In 1889, Vincent Van Gogh’s painting, “Sunflowers”, sold for $125. In 1987 it sold for $36...
    631 Words | 2 Pages
  • Time Value of Money - 1045 Words
    Time Value of Money (TVM), developed by Leonardo Fibonacci in 1202, is an important concept in financial management. It can be used to compare investment alternatives and to solve problems involving loans, mortgages, leases, savings, and annuities. TVM is based on the concept that a dollar today is worth more than a dollar in the future. That is mainly because money held today can be invested and earn interest. A key concept of TVM is that a single sum of money or a series of equal,...
    1,045 Words | 3 Pages
  • Time Value of Money - 2190 Words
    The Basic Law in Finance – Time Value of Money We earn money to spend it and we save money to spend it in the future. However, for most people spending money in the present time is more desirable since the future is unknown. We can gratify the desire to spend money today rather than in the future by knowing the basic law in finance – time value of money. This means that a dollar today is worth more than a dollar at some time in the future. Unfortunately, people very often want to buy...
    2,190 Words | 6 Pages
  • Time Value of Money - 1934 Words
    Time Value of Money The time value of money serves as the foundation for all other notions in finance. It affects business finance, consumer finance and government finance. Time value of money results from the concept of interest. The idea is that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it...
    1,934 Words | 5 Pages
  • Time Value of Money - 462 Words
    Associate Level Material Time Value of Money Resource: Ch. 12, 12-A, & 12-C of Health Care Finance Part I: Complete the following table by inserting your responses to the questions. Cite any sources you use. |Define the time value of money. |The time value of money is the value of money figuring in a given amount of interest earned over a given | | |amount of time. The time value of money is the central concept in...
    462 Words | 3 Pages
  • Fm-Time Value of Money
    Management Science-II Prof. R.Madumathi MODULE 2 Finance – An Introduction The functions of finance in an organization is interlinked with other managerial responsibilities and in many instances, the finance manager could also done the role of a managing director. For the smooth functioning as well as to achieve excellence, organizations have to concentrate on the financial impact of a decision and its consequences. This also helps the organization to aim at a desired competency level...
    2,590 Words | 11 Pages
  • Time Value of Money - 345 Words
    Week 5 Assignment 1 Time Value Of Money FP/101 Janie Wainscott If I placed $5,000.00 in a savings account earning 2.50% interest compounded annually. How much would you have at the end of four years? How much would you have if the interest is compounded semi-annually? Annually, in four years, I would have a final savings balance of $13,078.86. If my interest was compounded semi-annually of $13,084.52. That is a difference of $5.66. So, there is little difference in making payments...
    345 Words | 1 Page
  • Time Value of Money - 472 Words
    TIME VALUE OF MONEY INTRODUCTION This module or note is created to provide students with step-by-step explanation and discussion on time value of money that mainly based on formulas instead of time value of money tables. The reason is so that students are able to answer all sorts of questions that involve interest rates and time period that are not available in the tables. OUTLINE OF THE NOTE A. Simple Interest B. Compound Interest 1. Single Amount • Future Value • Present...
    472 Words | 3 Pages
  • Time Value of Money - 3690 Words
    INTRODUCTION To carry on business, corporation needs an almost endless variety of real assets. Many of these assets are tangible such as machinery, factories, offices, others are intangible, such as technical expertise, trademarks, patents. All of them need to be paid for. So, there are always two questions: “what real assets should the firm invest in?” And “how should the cash for the investment be raised?”. The answer to the first question is the firm’s investment, or capital budgeting...
    3,690 Words | 12 Pages
  • Time Value of Money - 2001 Words
    TIME VALUE OF MONEY I. DEFINITIONS * A peso received today is worth more than a peso received in the future * In economics, it is the opportunity cost of passing up the earning potential of a peso today. * The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. * Holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. II. KEY...
    2,001 Words | 8 Pages
  • Time Value of Money - 1547 Words
    TIME VALUE OF MONEY (CHAPTER 4) 1. Future value (FV), the value of a present amount at a future date, is calculated by applying compound interest over a specific time period. Present value (PV), represents the dollar value today of a future amount, or the amount you would invest today at a given interest rate for a specified time period to equal the future amount. Financial managers prefer present value to future value because they typically make decisions at time zero, before the start of...
    1,547 Words | 5 Pages
  • Solution for Time Value of Money
    FIN41340: Quantitative Methods in Finance Tutorial: Time Value of Money Lecturer: Email: Dr. Thomas Conlon conlon.thomas@ucd.ie Tutorial Questions 1. What is the present value of a 3-year annuity of $100 if the interest rate is 6%? What is the present value of this annuity, if you have to wait two years instead of one year for the first payment? 2. Your hedge fund can lease a supercomputer for the purposes of high frequency trading for $8, 000 per year (paid at year end) for six...
    497 Words | 2 Pages
  • Time Value of Money - 526 Words
    Chen Suiming 4385287 5.1 Money has a time value because a dollar in hand today is worth more than a dollar to be received in the future. This makes sense because if we had the dollar today, we could buy something with it or invest it and earn interest. 5.5 Compounding is the process by which interest earned on an investment is reinvested so that in future periods, interest is earned on the interest previously earned as well as the principal. Discounting is the process by which the...
    526 Words | 3 Pages
  • Time Value of Money - 303 Words
    Associate Level Material Time Value of Money Resource: Ch. 12, 12-A, & 12-C of Health Care Finance Part I: Complete the following table by inserting your responses to the questions. Cite any sources you use. |Define the time value of money. | | | |The time value of money is the value of money after figuring in the...
    303 Words | 2 Pages
  • Time Value of Money - 410 Words
    Time Value of Money According to the simple calculator on Bankrate.com, if I place $5000 in a saving account earning 2.50% Interest compounded at the end of a four year span I would have $10,558.93 accumulated in my account. Setting the annual interest option to semi-annual I would have $10,563.82. This is a difference of $4.89. Setting the annual interest rate to 3% compounded annually I would have $10,716.56 in a four year span. Setting the Annual interest option to semi-annual I would have...
    410 Words | 1 Page
  • Time Value of Money - 960 Words
    Time Value of Money The time value of money relates to many activities and decision in the financial world. “Understanding the effective rate on a business loan, the mortgage payment in a real estate transaction, or the true return on an investment depends on understanding the time value of money” (Block, Hirt, 2005). The concept of time value of money helps determine how financial assets are valued and how investors establish the rates of return they demand. Many different types of...
    960 Words | 3 Pages
  • Time Value of Money - 785 Words
    Time Value of Money The time value of money is an important concept for both the corporation and private consumer alike. The "Introduction to Finance and Accounting" class opened my eyes to some new financial concepts, especially in the context of large firms with debt and equity mixes to manage. I think that the time value of money stands out because not only do I stand to personally gain from the knowledge that time is money, I can also extrapolate the concept to my professional life with...
    785 Words | 2 Pages
  • Time Value of Money - 1324 Words
    Running Head: Time Value of Money Time Value of Money University of Phoenix Believe it or not many people through out the years thought that by putting money to the side, under the mattress or, even in the cookie jar that eventually one day they would be rich. Well not to spoil the surprise but the years it would take to make one rich by those means are far off and nothing in between. This is where Time Value of Money comes in. Time Value of Money is the idea that...
    1,324 Words | 4 Pages
  • Time Value of Money - 3915 Words
    Time Value of Money Problems 1. What will a deposit of $4,500 at 10% compounded semiannually be worth if left in the bank for six years? a. $8,020.22 b. $7,959.55 c. $8,081.55 d. $8,181.55 2. What will a deposit of $4,500 at 7% annual interest be worth if left in the bank for nine years? a. $8,273.25 b. $8,385.78 c. $8,279.23 d. $7,723.25 3. What will a deposit of $4,500 at 12% compounded monthly be worth at the end of 10 years? a. $14,351.80 b. $14,851.80 c. $13,997.40 d....
    3,915 Words | 37 Pages
  • Time Value of Money Assignments
    Time Value of Money (TVM) Assignments: 1. Calculating Interest Rates In 2011, the automobile industry announced the average vehicle selling price in the United States was $28,835. Five years earlier, the average price was $21,608. What was the annual increase in vehicle selling price? *** Enter 5 N Solve for 2. I/Y 5.94% N Solve for 5.5% I/Y 80 10% I/Y Solve for $150,000 $40,000 PV PMT FV $1,000,000 PV PMT FV $488.19 Calculating Interest Rates and Future Values In 1895, the...
    2,648 Words | 38 Pages
  • Time Value of Money - 1068 Words
    Time Value of Money As the name suggests it implies money valued with reference to time which may be present or future. “Time” allows the prospect to earn interest and defer consumption. Present Value (PV) – it means the current value of money in future measured at a particular interest rate. Future Value (FV) – it means the value of present money at some point of time in future measured at a particular interest rate. The value of dollar is more as of today than in future. This is due to...
    1,068 Words | 4 Pages
  • Time Value of Money - 723 Words
    Time Value of Money Time value of money is an amount of money available today can be safely invested to accumulate to a larger amount in the future. Present value- an amount of money available today. Future amount-amount receivable/payable at a future date Relationship Between Present Values and Present Values The difference between present value and future amount is the interest that is included in the future amount. It depends on two factors: 1. Rate of interest at which present...
    723 Words | 3 Pages
  • Time Value of Money - 705 Words
    Time Value of Money Project Show all your work! Name _________________ 1. If Mrs. Beach wanted to invest a lump sum of money today to have $100,000 when she retired at 65 (she is 40 years old today) how much of a deposit would she have to make if the interest rate on the C.D. was 5%? a. What would Mrs. Beach have to deposit if she were to use high quality corporate bonds an earned an average rate of return of 7%. b. What would Mrs. Beach have to deposit if she...
    705 Words | 3 Pages
  • Time Value of Money Paper
    Time value of money ("TVM") is defined as the idea that money available at the present time is worth more than the same amount in the future, due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. TVM is also often referred to as "present discounted value" (Answers Corporation, 2006). TVM concepts help people like managers or investors understand the benefits and the future...
    852 Words | 3 Pages
  • Time Value of Money and Present Value
    Date: 14/11/2012 52. Annuities: 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 $23,000 per year per child, payable at the beginning of each school year. The annual interest rate is 5.5 percent. How much money must you deposit in account each year to fund your children’s...
    1,169 Words | 7 Pages
  • Time Value of Money - 530 Words
    The time value of money A rupee today is more valuable than a rupee a year hence. Thus money has time value this is because of several reasons:-1) Individuals, in general prefer current consumption to future consumption.2) In an inflationary period, a rupee today represents a greater real purchasing power than a rupee a year hence.3) Capital can be employed productively to generate positive returns. An investment of one rupee today would grow to (1+r) a year hence (r is the rate of return...
    530 Words | 2 Pages
  • Time Value of Money - 409 Words
    Time Value of Money Time value of money is the concept that the value of a dollar promised in the future is less than the value of a dollar to be received today. For different situations, financial reporting uses different measurements. Some of the applications of present value-based measurements to accounting topics are notes, leases, pensions and installment contracts, etc. This article presents three exercises in order to develop students’ basic valuation concepts and skills with respect...
    409 Words | 2 Pages
  • Time Value of Money - 734 Words
    In financial management, one of the most important concepts is the Time Value of Money (TVM). Time Value of Money concepts helps a manager or investors understand the benefits and the future cash flow to help justify the initial cost of the project or investment. Many of the assets businesses and individuals own are financed with money borrowed from others, so the understanding of TVM is crucial to making good buying decisions. To recognize how annuities affect the time value of money, managers...
    734 Words | 3 Pages
  • Time Value of Money - 606 Words
    Credit card financial service companies are commonly known to issue private student loans. Therefore, credit card companies would use the time value of money to determine loan payment schedules and the number that students most fear, the ending balance, the future value of the loan. Credit card companies would use the formula for present value of an annuity to determine the payment schedule, and they would use the formula for future value of an annuity to determine how much money the student...
    606 Words | 2 Pages
  • Time Value Of Money - 365 Words
    Q. 1 Jim makes a deposit of $12,000 in a bank account. The deposit is to earn interest annually at the rate of 9 percent for seven years. How much will Jim have on deposit at the end of seven years? Q. 2 Find the present value of $10,000 to be received at the end of 10 periods at 8% per period. Q.3 What is the value of the following set of cash flows today? The interest rate is 8% for all cash flows. Year Amount 1 Rs. 3000 2 Rs.5000 3...
    365 Words | 2 Pages
  • Time Value of Money formula
    TIME VALUE OF MONEY FORMULA SHEET # TVM Formula For: 1 Future Value of a Lump Sum. (FVIFi,n) Compounded/Payments (m) Times per Year Annual Compounding FVn = PV( 1 + i )n 2 FV 1 i PV = Present Value of a Lump Sum. (PVIFi,n) -n Future Value of an Annuity. (FVIFAi,n) FVAn = CF 4 Present Value of an Annuity. (PVIFAi,n) 1 - ( 1 + i )-n PVAn = CF i 5 Present Value of Perpetuity. (PVA ) 6 Effective Annual Rate given the APR. 7...
    385 Words | 9 Pages
  • Time Value of Money - 339 Words
    Associate Level Material Time Value of Money Resource: Ch. 12, 12-A, & 12-C of Health Care Finance Part I: Complete the following table by inserting your responses to the questions. Cite any sources you use. |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. | |Provide a real-world example for the time |A 10% interest rate for an investment of $3,000. In a year the interest...
    339 Words | 2 Pages
  • Time Value of Money - 570 Words
    Why is the time value of money concept important? In what quantitative decisions might the time value of money be used? How do you apply the time value of money concept to make decisions in your personal life? The idea of the time value of money is important because of the fundamental assertion that one would rather have X number of dollars now, than later. If the money is taken later a value of X+i is preferred. This concept is applied to all situations where someone uses the monies of...
    570 Words | 2 Pages
  • Time Value of Money - 2416 Words
    Time Value of Money Practice Problems − Solutions Dr. Stanley D. Longhofer 1) Jim makes a deposit of $12,000 in a bank account. The deposit is to earn interest annually at the rate of 9 percent for seven years. a) How much will Jim have on deposit at the end of seven years? P/Y = 1, N = 7, I = 9, PV = 12,000, PMT = 0 ⇒ FV = $21,936.47 b) Assuming the deposit earned a 9 percent rate of interest compounded quarterly, how much would he have at the end of seven years? P/Y = 4, N = 7 × 4 = 28 ⇒ FV =...
    2,416 Words | 6 Pages
  • Time Value of Money - 1643 Words
    Time Value of Money Time Value of Money (TVM) is an economic theory that suggests the idea that money available today is more valuable now versus the future. Three reasons for TVM are inflation, risk and liquidity (Investopedia, 2008). As a result, borrowers charge interest to ensure that the value of their money is not eroded by inflation. Inflation is an increase in the cost of goods and services provided. Risk is the possibility that an investment may yield different results than the results...
    1,643 Words | 5 Pages
  • Time Value of Money - 1035 Words
    Abstract The first steps toward understanding the relationship between the value of dollars today and that of dollars in the future is by looking at how funds invested will grow over time. This understanding will allow one to answer such questions as; how much should be invested today to produce a specified future sum of money? Time Value of Money In most cases, borrowing money is not free, unless it is a fiver for lunch from a friend. Interest is the cost of borrowing money. An interest...
    1,035 Words | 3 Pages
  • 7 The Concept Of Time Value Of Money
    Time Value of Money A dollar received today is worth more than a dollar received in the future Time Value of Money 1 Compounding And Future Value 1. 2. 3. Simple Interest occurs when interest is earned only on the initial investment Compound Interest occurs when interest paid on the investment during the first period is added to the principal; then, during the second period, interest is earned on this new sum. For example, we place RM100 in a savings account that pays 6% interest,...
    2,018 Words | 24 Pages
  • Time Value of Money and Positive Rate
    b 1. Your grandmother invested one lump sum 17 years ago at 4.25 percent interest. Today, she gave you the proceeds of that investment which totaled $5,539.92. How much did your grandmother originally invest? a. $2,700.00 b. $2,730.30 c. $2,750.00 d. $2,768.40 e. $2,774.90 d 2. Forty years ago, your father invested $2,500. Today that investment is worth $107,921. What is the average rate of return your father earned on his investment? a. 8.50 percent b. 9.33 percent c. 9.50...
    712 Words | 4 Pages
  • The Time Value Of Money And Financial Calculator
    The Time Value of Money and Financial Calculator Using 货币的时间价值与金融计算器的使用 1-25 FRM(Financial Risk Manager)金融风险管理师 Calculator Policies 2-25 FRM(Financial Risk Manager)金融风险管理师 基本设定 TI BA II PLUS计算器的基本设定  开兲机: 【ON/OFF】 键  主要功能按键:都印在键上。  次要功能按键:按【2ND】切换键之后,显示写在按键上斱的次要功能 。如【2ND 】【ENTER】表示调用SET功能。  小数位数的设置:默认为两位小数;更改设置时,依次按【2ND】【·】 ,表示调用FORMAT功能,出现DEC=2.00,若要改为四位小数,输入4 ,再按【ENTER】,出现DEC=4.0000。 3-25 FRM(Financial Risk Manager)金融风险管理师 基本设定 一般清除:【CE/C】键。 AOS模式和Chn ...
    1,367 Words | 24 Pages
  • Time Value of Money and Elite Ballplayer
    IS3222 – IT and Customer Relationship Management Academic Year 2014/2015 Semester 1 Case Assignment 3 Read the Harvard Business School case for Maru Batting Center, # KEL688. The optional technical note, Using Customer Relationship Management to Analyze the Lifetime Value of a Customer #KEL695, can also help walk through the exercises. The data in Excel format is available for download in the course package, #KEL691. Answer the questions below based on only information presented in the...
    474 Words | 3 Pages
  • Understanding the Time Value Money Formula
    UNDERSTANDING THE TIME VALUE MONEY FORMULA TIME VALUE OF MONEY TRIDENT UNIVERSITY INTERNATIONAL AVIE MARIE JOHNSTONE STRATEGIC CORPORATE FINANCE FIN501 MODULE 2 SESSION LONG PROJECT PROFESSOR...
    3,522 Words | 11 Pages
  • Factors That Affect the Time Value of Money
    Factors that Affect the Time Value of Money Time value of money is the concept that an amount of money in one's possession is worth more than that same amount of money promised in the future (Garrison, 2006). The reason for this is that money today can be invested to earn interest and therefore will be worth more in the future (Brealey, Myers, & Marcus, 2004). This paper will explain how annuities affect time value of money (TVM) problems and investment outcomes. In addition, this paper will...
    1,091 Words | 3 Pages
  • Time Value of Money and Integrated Case
    Integrated Case 5-42 First National Bank Time Value of Money Analysis You have applied for a job with a local bank. As part of its evaluation process, you must take an examination on time value of money analysis covering the following questions. A. Draw time lines for (1) a $100 lump sum cash flow at the end of Year 2, (2) an ordinary annuity of $100 per year for 3 years, and (3) an uneven cash flow stream of -$50, $100, $75, and $50 at the end of Years 0 through 3. ANSWER:...
    2,929 Words | 29 Pages
  • Strat Finance Time Value of Money
    Rita Collins FIN 501- Strategic Corporate Finance Module 2: Case Study T.U.I According to Wikipedia.com, “Present value is the value on a given date of a future payment or series of future payments, discounted to reflect the time value of money and other factors such as investment risk. Present value calculations are widely used in business and economics to provide a means to compare cash flows at different times on a meaningful "like to like" basis.” (1) In this paper, we are...
    833 Words | 3 Pages
  • Finance Time Value of Money Assignment
    MGCR 341: Finance 1 Vadim di Pietro Assignment 1: Solutions Topic: Time value of money: Retirement savings problem [pic] 1) Today is July 1, 2010. You just graduated university. You plan to take a year off to travel and then start work one year from today. Your first monthly salary of $5,000 will be paid on August 1, 2011. Assume your monthly salary will increase by 0.8% each month thereafter, until you retire. Suppose that you plan to retire on July 1, 2041, right after receiving...
    1,179 Words | 5 Pages
  • Time Value of Money and Risk Analysis
    Annuities # 2 Time Value of Money (TVM) Understanding how the time value of money works can be most easily explained by taking your initial investment let us say $10 by the end of year five it could be worth $100. This means you have earned $90 in the last five years. Next year, you invest $10 and at the end of year five it is worth $80 because interest has not accumulated on the time that was lost between year 1 and year 2. My example of this is that my fiancé put $3000 in each of...
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  • Time Value of Money and Correct Answer
    How much must you invest at 10% interest in order to see your investment grow to $5,000 in 5 years? Select one: A. $3,070 B. $3,415 C. $3,105 D. none of these Feedback The correct answer is: $3,105 Question 2 Correct Mark 1.00 out of 1.00 Flag question Question text Sydney saved $50,000 during her first year of work after college and plans to invest it for her retirement in 40 years. How much will she have available for retirement if she can make 8% on her investment? Select...
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  • Questions on Calculation the Time Value of Money
    Question 1 (5 points) $100 today is worth the SAME as $100 tomorrow. True False FALSE Question 2 (5 points) At an interest rate of 10% it is better to have $100 today than $120 in 2 years. True TRUE False Question 3 (5 points) Megan wants to buy a designer handbag and plans to earn the money babysitting. Suppose the interest rate is 6% and she is willing to wait one year to purchase the bag. How much babysitting money (to the nearest whole dollar) will she need to earn today...
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  • The Value of Money - 900 Words
    Running head: SHORT TITLE OF PAPER The Value of Money Reggnia Gilchrist Argosy University LASA 1 Time Value of Money A. The future value of a dollar amount put into a savings account reflects what we expect the value of the dollar amount to be in a fixed amount of time, or how we expect the money to grow. Growth or in this case savings account, the interest rate paid, is the amount that we have deposited. Mary has been depositing $500 in her savings account for the last 19yrs,...
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  • Time is money - 267 Words
    Time is a period designated for a given activity like studying, working and playing. Young people spend all their time pursuing leisure and entertainment. Studying is only given a limited amount of time in their lives. We know that studying is our future. So why don’t we give the majority of our time to studying just for a little part of life? Studying now makes things easier later. To have a job that you’re comfortable in makes life easier and more relaxing. The key to...
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  • Time Value of Money and Annual Interest Rate
    Prof. Ramakar Jha/Financial Management/Time Value of Money/Exercise # 1 Financial Management: Prof Ramakar Jha 1 Exercise 1: Time Value of Money Set 1 1. You are planning to retire in twenty years. You'll live ten years after retirement. You want to be able to draw out of your savings at the rate of Rs.10,000 per year. How much would you have to pay in equal annual deposits until retirement to meet your objectives? Assume interest remains at 9%. [Rs.1254] 2. You can deposit Rs.4000 per...
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  • Time Value of Money, a Financial Management Concept
    Money is an essential part of everyday existence and in order to understand and handle money matters, financial managers must understand how factors such as time and discount interest rates affect value. Money has a time value associated with it and therefore, a dollar today is worth more than a dollar in the future (Block & Hirt, 2005). Today money can be invested to earn interest to create more cash later or decrease the value over time. This paper will explain various financial applications...
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  • Time Value - 734 Words
    TIME VALUE Time Value • Interest Rates • Compounding • Discounting • Effective Rates • Annuities • Perpetuities 2 Interest Rates • Types – Bank rate vs. Prime rate – Mortgage rates – Deposit, Loan, Credit rates • Movement – Demand / Supply – Inflation/ Deflation – Government intervention 3 Main Components 1. Real 2. Inflation 3. Risk *Note: - Risk Free (Rf) = Real + Inflation - Nominal = Rf + Risk Premium 4 Risk Free & Real Rate • Risk Free (Rf) = Real +...
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  • Time Value of Money and End-of-year Loan Payment
    Fall 2012 Finc 414 (01) Assignment no. : One Time value of money Please solve the attached problems Date of Submission: Monday 10/09/2012 Please: No Late Submission Solved By Sherin Ezant 1. Accumulating a growing future sum A retirement home at Deer Trail Estates now costs $ 185,000. Inflation is expected to cause this price to increase at 6% per year over the 20 years before G.L. Donovan retires....
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  • FP120 r8 Time Value of Money Worksheet1 Tommy
    University of Phoenix Material Time Value of Money Refer: to Ch. 1, “Time Value of Money” section of Personal Finance. Respond to the following questions in 50 to 100 words each. 1. What is the definition of Time Value of Money? Please define present and future value. Time value of money is when money received or paid out in the future is not equal to the money paid out or received in the present. Basically the power of time is on our side which makes the investment grow. There are...
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  • Time Value - 11020 Words
    TIME VALUE OF MONEY 1. If you were scheduled to receive Rs 100,000 five years hence, but you wish to sell your contract note for its present value, which type of compounding would you rather have the purchaser of your contract note to use to find the purchase price, 8 percent compounded: (a) (b) (c) (d) (e) Continuously Quarterly Semi-annually Annually None of the above 2. According to the rule of 69, the doubling period is equal to (a) (b) (c) (d) (e) 0.25 + (69/ Interest rate) 0.35 + (69/...
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  • Time Value - 1532 Words
     The Present and Future Price of Money Trident University International FIN 501 Module 2: Case Assignment Dr. John Halstead One of the most important concepts about saving and investing is the time value of money. It can be used to compare investment alternatives and to solve problems involving loans, mortgages, leases, savings, and annuities. This means money paid out or received in the future is not equivalent to money paid out or received today because...
    1,532 Words | 6 Pages
  • Finance Basics for Managers: Time Value of Money Problems
    FIN2110 Finance Basics for Managers Fall 2011 Time Value of Money Problems Calculating Future Values Assume you deposit $10,000 today in an account that pays 6% interest. How much will you have in five years? = $10,000 (FVIF of 6%, 5years) = $10,000 * 1.3382 = $13,382 Calculating Present Values Suppose you have just celebrated your 19th birthday. A rich uncle has set up a trust fund for you that will pay you $150,000 when you turn 30. If the relevant...
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  • Business: Time Value of Money and Income Statement
    Financial Management Mock Midterm Name___________________________________ 1) Which of the following organization forms accounts for the greatest number of firms? A) Limited Partnership B) "S" Corporation C) "C" Corporation D) Sole Proprietorship Section: 1.1 The Four Types of Firms 2) The person charged with running the corporation by instituting the rules and policies set by the board of directors is called A) the Company President. B) the Chief Operating Officer. C) the Chief...
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  • Time Value of Money Phoenix University Online
    Time value of money Find a Time Value of Money calculator on the Internet and calculate your own personal figures, changing the interest rate and the compounding of the interest rate (annually, semiannually, and quarterly) as delineated below: 1. You place $5,000 in a savings account earning 2.50% interest compounded annually. How much will you have at the end of four years? How much would you have at the end of four years if interest is compounded semiannually? With an annual...
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  • Money and Present Value - 1761 Words
    1. If you deposit $10,000 in a bank account that pays 10 percent interest annually, how much money will be in your account after 5 years? 2. What is the present value of a security that promises to pay you $5,000 in 20 years? Assume that you can earn 7 percent if you were to invest in other securities of equal risk. 3. If you deposit money today into an account that pays 6.5 percent interest, how long will it take for you to double your money? 4. Your parents are planning to retire in...
    1,761 Words | 11 Pages
  • Fair Value of Money Calculation
    1.) On January 1, 2010, Ott Co. sold goods to Flynn Company. Flynn signed a zero-interest-bearing note requiring payment of $80,000 annually for seven years. The first payment was made on January 1, 2010. The prevailing rate of interest for this type of note at date of issuance was 10%. Ott should record sales revenue in January 2010 of what? Present value of annuity due PVad = [ $80,000 x f( n=7, i=10%)] x (1+.10) PVad = $80,000 x 4.868 x 1.10 = $428,384 2.) On January 1, 2010,...
    296 Words | 2 Pages
  • Math tools for Time Value of Money (additional help guide)
    Slide 4.1 Corporate Financial Management, 5th edition Glen Arnold Mathematical Tools For Time Value of Money Glen Arnold, Corporate Financial Management, 5th Edition © Pearson Education Limited 2013 Slide 4.2 Simple Interest and Future Value • Simple interest A sum of £10 is deposited in a bank account that pays 12 per cent per annum. At the end of year 1 the investor has £11.20 in the account. F = P(1 + i) 11.20 = 10(1 + 0.12) where F = Future value, P = Present value, i...
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  • Future Value and Present Value
    . To find the PVA, we use the equation: PVA = C({1 – [1/(1 + r)]t } / r ) PVA = $60,000{[1 – (1/1.0825)9 ] / .0825} PVA = $370,947.84 The present value of the revenue is greater than the cost, so your company can afford the equipment. 7. Here we need to find the FVA. The equation to find the FVA is: FVA = C{[(1 + r)t – 1] / r} FVA for 20 years = $3,000[(1.08520 – 1) / .085] FVA for 20 years = $145,131.04 FVA for 40 years = $3,000[(1.08540 – 1) / .085] FVA for 40...
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  • Present Value/ Future Value
    Present value is where the value on a set date of a future payment is discounted to reflect the time value of money and other factors. This can also apply to a series of future payments. Present value calculations are commonly utilized in business and economics to provide a way to compare cash flows at different times. Present value can be described as the current worth of a future sum of money or stream of cash flows given a specified rate of return. (http://www.getobjects.com) Future cash...
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  • Happiness and Money - 774 Words
    Money Money doesn’t buy happiness but it helps. Money has become one of the main things in our modern life. Some people live their lives to earn money. They work hard, trying to earn as much money as they can. Some of them become crazy about it and lose their dignity hunting money. They don’t appreciate such important things as family, friendship, love and other feelings. Such people become greedy, they spend their lives in loneliness. I don’t deny that money influences our life a lot. As...
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  • Tvm of Money - 2826 Words
    Time Value of Money Extra Problem Set 1 1. You are planning to retire in twenty years. You'll live ten years after retirement. You want to be able to draw out of your savings at the rate of $10,000 per year. How much would you have to pay in equal annual deposits until retirement to meet your objectives? Assume interest remains at 9%. [$1254] 2. You can deposit $4000 per year into an account that pays 12% interest. If you deposit such amounts for 15 years and start drawing money...
    2,826 Words | 12 Pages
  • Time and Mary - 541 Words
    Mary has been working for a university for almost 25 years and is now approaching retirement. She wants to address several financial issues before her retirement and has asked you to help her resolve the situations below. Her assignment to you is to provide a 4-5 page report, addressing each of the following issues separately. You are to show all your calculations and provide a detailed explanation for each issue. Issue A: For the last 19 years, Mary has been depositing $500 in her savings...
    541 Words | 3 Pages
  • Present Value - 1404 Words
     Net present Value, Mergers and acquisitions Abstract Main objective of undertaking this to report was learn about NPV present value (NPV) method to make capital budgeting decision(Google NEW Project) and success factors involved in mergers and acquisitions(Google-Groupon Case). Answers to the Assignments Part I: Google should go ahead with the new project. Part-II: Google’s acquisition of Groupon would have been win -win situation for both corporations Now I will discuss both...
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  • Money and Annual Interest Rate
    1) A $100 deposit today that earns an annual interest rate of 10% is worth how much at the end of two years? Assume all interest received at the end of the first year is reinvested the second year. 2) An investment of $100 today is worth $116.64 at the end of two years if it earns an annual interest rate of 8%. How much interest is earned in the first year and how much in the second year of this investment? 3) Which of the following investments has a larger future value? A $100...
    550 Words | 2 Pages
  • Concept of Present Value - 1264 Words
    WHY IS THE CONCEPT OF PRESENT VALUE SO IMPORTANT FOR CORPORATE FINANCE? The importance of concept of present value to the world of corporate finance is that present value calculations are widely used in business and economics to provide a means to compare cash flows at different times. Present Value’s definition and simplistic formula used for normal purchases, the concept’s importance to corporate finance and why present value is the very first topic taught in finance classes explain that...
    1,264 Words | 5 Pages
  • Net Present Value - 1886 Words
    MGMT 640 Section 9056, Mid-term Exam Fall 2010 This exam consists of 33 multiple-choice questions. Enter your answers on the Answer tab of the Excel spreadsheet that has been provided. (The worksheet tabs are located at the bottom of your worksheet.) Put your calculations on the Calculations tab as evidence of your work. Your calculations will be used as evidence of your independent work only and will not be used for partial credit for incorrect answers. Change the Excel file name to...
    1,886 Words | 8 Pages
  • Present Value and Capital Budgeting
    Part I A. Present Value with Discount rate of 7% = 15000/(1+7%) = 15000/1.07 = $14,018.69 Present Value with Discount rate of 4% = 15000/(1+4%) = 15000/1.04 = $14,423.08 B. Account A - Present Value with Discount rate of 6% = 6500/(1+6%) = 6500/1.06 = $6,132.08 Account B - Present Value with Discount rate of 6% = 12600/(1+6%)^2 = 12600/1.1236 = $11,213.96 C. Present Value of Gold Mine 7% = 4900000/1.07 + 61,000,000/(1.07)^2 + 85,000,000/(1.07)^3 = 45,794,392.52 + 61,000,000/1.1449 +...
    1,099 Words | 5 Pages
  • Net Present Value - 762 Words
    Assignment: Entrepreneurial Finance Due date: ------------------------------------------------- Note: Individual attempt would be honored. Copy-pasted would carry Zero Marks. 1. The TecOne Corporation is about to begin producing and selling its prototype product. Annual cash flows for the next five years are forecasted as: Year Cash Flow 1 -$50,000 2 -$20,000 3 $100,000 4 $400,000 5 $800,000 A. Assume annual cash flows are...
    762 Words | 3 Pages
  • The Value of Hennes & Mauritz - 12681 Words
    University of Gothenburg School of Business, Economics and Law The value of Hennes & Mauritz Bachelor thesis in Finance Universityof Gothenburg, -School of Business, Economics and Law Autumn 2011 Supervisor: Wlodek Bursztyn Authors: Lucas Lihnell Johan Sandgren Table of Contents 1. INTRODUCTION 5 2. THEORETICAL FRAMEWORK 7 2.1. THE CONCEPTS OF VALUE AND DISCOUNTED CASH FLOW VALUATION 2.2 DISCOUNTED DIVIDEND MODEL 2.2.1 ONE-STAGE/ GORDON GROWTH MODEL 2.2.2...
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  • Net Present Value - 7635 Words
    PART C – UNIT V FINANCIAL STATEMENTS ANALYSIS 1. A company’s current ratio is 2.2 1 and quick (acid test) ration is 1.0 to 1 at the beginning of the year. At the end of the year, the company has a current ratio of 2.5 to 1 and a quick ratio of .8 to 1. Which of the following could help explain the divergence of the ratios from the beginning to the end of the year? a. An increase in inventory levels during the current year. b. An increase in credit sales in relationship to cash sales. c....
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  • Finance and Present Value - 513 Words
    Week 1 Capital Budgeting I Tutorial: Chapter 1, 2 Chapter 1 Introduction to Corporate Finance Question 3: Investment and financing decisions Vocabulary test. Explain the differences between: a. Real and financial assets. b. Capital budgeting and financing decisions c. Closely held and public corporations d. Limited and unlimited liability. Answer a. Financial assets, such as stocks or bank loans, are claims held by investors. Corporations sell financial assets to...
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  • Economic Value Added - 1248 Words
    How important is it for firms to focus on the value added concept? Definition of Value Added concept: The enhancement a company gives its product or service before offering the product to customers. Value added is used to describe instances where a firm takes a product that may be considered a homogeneous product, with few differences (if any) from that of a competitor, and provides potential customers with a feature or add-on that gives it a greater sense of value. * EVA is...
    1,248 Words | 4 Pages
  • Balance Sheet and Value - 1704 Words
    Learning Goal 6: Explain the relationships among financial decisions, return, risk, and the firm's value. 1) Any action taken by the financial manager that increases risk will also increase the required return. True or False 2) In common stock valuation, any action taken by the financial manager that increases risk will cause an increase the required return. True or False 3) In common stock valuation, any action taken by the financial manager that increases risk will cause an...
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  • Net Present Value - 777 Words
    1. How much will $1000 deposit in savings account earning a compound annual interest rate of 6% be worth at the end of the following number years? a) 3 years $1,191 b) 5 years $1,338 c) 10 years $1,791 2. If you require a 9% return on your investment which would you prefer? a) $5,000 today PV = $5,000 b) $15,000 five years from today PV = $9,748.50 c) $1,000 per year for 15 years PV = $8061 Select option b...
    777 Words | 3 Pages
  • Net Present Value and Mercury
    Jide Wintoki From: Richard Smith, Scott Mitchell, Zack Gregory Re: Mercury Athletic Acquisition Based on our analysis of Mr. Liedtke’s base case projections for a potential acquisition of Mercury Athletic, we have concluded that this is a positive net present value project, and that AGI should proceed with the acquisition. Under Mr. Liedtke’s operating assumptions, we calculate the value of Mercury’s discounted cash flows to be $624.446 million, and the acquisition price to be $156.643 million,...
    691 Words | 2 Pages
  • Power of Terminal Value - 15041 Words
    Case Study Report The Power of Terminal Value ARCADIAN MICROARRAY TECHNOLOGIES,INC. Contents TOC o 1-3 h z u HYPERLINK l _Toc400235473 1. Introduction PAGEREF _Toc400235473 h 3 HYPERLINK l _Toc400235474 1.1. Object of Transaction PAGEREF _Toc400235474 h 3 HYPERLINK l _Toc400235475 1.2. Buyer Sierra Capital Partners PAGEREF _Toc400235475 h 3 HYPERLINK l _Toc400235476 1.3. Seller Arcadian Microarray Technologies, Inc. PAGEREF _Toc400235476 h 3 HYPERLINK l _Toc400235477 2. Methodology...
    15,041 Words | 54 Pages
  • Net Present Value and Similar Bonds
    1. If you deposit $1,500 today, how much will you have in 3 years, given that interest is 9%, compounded monthly 2. You just won $150,000 scholarship. What is the value of this scholarship if the payment wil be made of $50,000 per year for the next 2 years, followed by payments of $25,000 per year for the next two years. The appropriate interest rate is 8% per year 3. A level-coupon bond has par value of $1,000 that pays $120 per year and has 10 years to maturity. If the yield for...
    367 Words | 2 Pages
  • Assignment: Net Present Value and Capital
    [pic] AMITY SCHOOL OF DISTANCE LEARNING Post Box No. 503, Sector-44 Noida – 201303 FINANCIAL MANAGEMENT Assignment A Marks 10 Answer all questions. 1. a. Should the titles of controller and treasurer be adopted under Indian context? Would you like to modify their functions in view of the company practice in India? Justify your opinion? b. A firm purchases a machinery for Rs. 8,00,000 by making a down payment of Rs.1,50,000 and remainder...
    2,375 Words | 13 Pages
  • Net Present Value and Discussion Questions
    Week One Discussion Questions • What is the capital market? How is the primary market different from the secondary market? In your opinion, are these markets efficient? Why? • What are three primary roles of the U.S. Securities and Exchange Commission (SEC)? How does the Sarbanes-Oxley Act of 2002 augment the SEC’s role in managing financial governance? Do you think businesses became more ethical after Sarbanes-Oxley was passed? Provide examples to support your answer. • What ratios...
    486 Words | 2 Pages
  • Finance: Net Present Value and Rate
    Time Value of Money Exercise 1. If you invest $1000 today at an interest rate of 10% per year, how much will you have 20 years from now, assuming no withdrawals in interim? 2. a. If you invest $100 every year from the next 20 years starting one year from today and you earn interest of 10% per year, how much will you have at the end of the 20 years? b. How much must you invest each year if you want to have $50000 at the end of the 20 years? 3. What is the present value of the...
    2,892 Words | 7 Pages

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