TABLE 4 Present Value of an Ordinary Annuity of $1 1 1 (1 i)n PVA i n/i 1 2 3 4 5 6 7 8 9 10 1.0% 0.99010 1.97040 2.94099 3.90197 4.85343 5.79548 6.72819 7.65168 8.56602 9.47130 1.5% 0.98522 1.95588 2.91220 3.85438 4.78264 5.69719 6.59821 7.48593 8.36052 9.22218 2.0% 0.98039 1.94156 2.88388 3.80773 4.71346 5.60143 6.47199 7.32548 8.16224 8.98259 9.78685 2.5% 0.97561 1.92742 2.85602 3.76197 4.64583 5.50813 6.34939 7.17014 7.97087 8.75206 9.51421 3.0% 0.97087 1.91347 2.82861 3.71710 4.57971 5.41719
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1. Calculating the Number of Periods At 8 percent interest, how long does it take to double your money? To quadruple it? 2. Perpetuities An investor purchasing a British consul is entitled to receive annual payments from the British government forever. What is the price of a consul that pays $160 annually if the next payment occurs one year from today? The market interest rate is 4.5 percent. 3. Present Value and Multiple Cash Flows Investment X offers to pay you $6,000 per
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Date Open High Low Close Volume Adj Close 10 Days SMA 14 Days SMA 20 Days SMA 30 Days SMA 2/1/2007 28.68 28.71 28.15 28.35 17905200 28.35 2/2/2007 28.57 28.92 28.45 28.77 16483100 28.77 2/5/2007 28.67 28.8 28.36 28.56 11163300 28.56 2/6/2007 28.61 29.56 28.6 29.35 24506800 29.35 2/7/2007 29.35 30.15 29.12 29.89 29162600 29.89 2/8/2007 29.75 30.24 29.73 30.08 15561700 30.08 2/9/2007 30.07 30.16 29.51 29.74 18172200 29.74 2/12/2007 29.29 29.77 29.05 29.17 18316200
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Time value of money is the concept that shows the value of money which decreases day by day. There are so many factors which contribute to the time value of money such as inflation and increasing interest rates. The time value of money is sued to solve the problems which are related to the loans, mortgage, leases, saving and annuities. In the investment, time value of money is used to compare the alternatives of investment (Weil, 1990). The time value of money is based on the concept that money that
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SUBJECT: Time Value of Money 12 OCT 13 This memo accompanies the Excel Spreadsheet labeled Case FIN 50 and is intended to explain the significance of the various formulae and how our decisions with finances affect our bottom line numbers. Every Time Value of Money Problem has either four or five variables, we typically will know three to four of these variables and thus will only need to solve for the one remaining variable. Lump Sum Present Value Any time we take an amount of money and receive
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What is the Rate of Return Percentage? In the mini-case, Mr. Breezeway indicated two kinds of percentage to determine the required return. One of them is the companies' return on book equity (% 15) and the other one is the investment return percentage in the rural supermarket industry (% 11) which shows that investors in rural supermarket chains, with risks similar to Prairie Home Stores, expected to earn about % 11 percent on average. Since the companies' rate of return determined by the rate
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return cash payments forever. It also can be used for any asset that has no discernable end date, like a bank account. Common and Preferred Stock Preferred stock does not have a maturity date although the company can buy back these shares at any time, in other words; the stocks become callable. According to the video, these types of stocks do not inflate as common
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payment if the loan is to be repaid over 25 years. b. Compute the total payments and total interest under the 25-year loan period. 1 4. (Depreciation) A salesperson buys a new car for $14,000 and depreciates it over 5 years, after which time its salvage value is $2000. Find the amount depreciated and the car’s value at the end of each of the 5 years using a. straight-line depreciation. b. sum-of-the-digits depreciation. c. fixed-percentage depreciation. 5. (Sum of Annuity)A mother
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Week 4 Study Guide: Business Valuation Readings and Key Terms • Ch. 5 of Fundamentals of Corporate Finance o Time value of money o Time zero o Future value (fv) o Principal o Simple interest o Compounding o Compound interest o Discounting o Discount rate o Present value (pv) o Rule of 72 • Ch. 6 o Annuity o Perpetuity o Ordinary annuity o Present value of an annuity (PVA) o Amortization o
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financial manager with to invest in some new equipment, you need to be able to place a value on the total amount of additional profits your company will receive over the next several years due to this new purchase. In general, people prefer to have money paid to them today rather than tomorrow. The value of one dollar today is exactly one dollar. But what about being paid one dollar exactly one year from now? Would you pay a dollar for the that dollar to be paid to you in one year? Definitely not!
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