MGT 555 Financial Management Session 2

If a firm's earning per share grew from $1 to $2 over a 10 year period, the total growth would be 100%, but the annual growth rate would be less than 10%. TRUE
The above statement is true because annual growth rate is 7.18%.
In calculation:
FV= PV (1+1)­­n The above statement is true because annual growth rate is 7.18%.
$2=$1 (1+I)10 In calculation:
$2/$1 = (1+I)10 FV= PV (1+r)­­n
(1+I)10 =2 or, 2 = 1 (1+r)10
(1+I)=2 (1/10) or, 2/1 = (1+r) 10
1+I = or, (1+r)10 = 2
I= or, (1 + r) = 2(1/10) or, (1 + r) = 2(0.1) or, (1 + r) = 1.0718

Time Value of Money Assignment
1a PV RATE #PER PMT FV TYPE 50,000 0 10 0 0 ($50,000.00) b 50,000 0.05 10 0 0 ($81,444.73) c 50,000 0.1 10 0 0 ($129,687.12) 2a -25,000 0 5 0 25,000 0 b -19,588 0.05 5 0 25,000 0 c -15,523 0.1 5 0 25,000 0 3 PV RATE #PER PMT FV TYPE 10,000 0.1 5 0 ($16,105.10) 0 4 0 0.08 4 250 ($1,126.53) 1 5 ($500.00) 0.07 3 0 612.52 0 PV RATE #PER PMT FV TYPE
6 ($1,784.31) 0.09 20 0 10,000 0 7 ($1,292.10) 0.07 5 0 5,000 0 8 1000 0.065 11.00673904 0 2,000 0 9 ($8,003.49) 0.06 5 1900 0 0 Total Cost of the car was $8,003.49 + $2,000=$10,003.49 10 What Is the present value of $50 received every year forever, assuming an interst rate of 5%? PV of a perpetuity = PMT/I $50/.05 =