Tutorial: Present Values and Debt Pricing This material involves a review of topics covered during your FIN 214 course. You may also find more information on it in Chapter 6 of the AC 305/306 textbook (the first half of the book may be accessed through the “Read, Study, & Practice” module of WileyPlus). When you are considering any type of long-term investment – whether you are making the investment in a project, or making an investment in a long-term asset, or attempting to get long-term
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Time value money: You want to buy an ordinary annuity that will pay you $4,000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. The maximum price you would be willing to pay for the annuity is closest to $32,000. $39,272. $40,000. $80,000. 2. With continuous compounding at 10 percent for 30 years, the future value of an initial investment of $2,000 is closest to $34,898. $40,171. $164,500. $328,282. 3. In 3 years you
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Assignment ACC206 1. Basic present value calculations Future Value $12,000.00 Years: 5 Rate: 12% Present Value = $6,809 Annual Cash Flow $16,000.00 Duration 12 Rate 14% Present Value $90,565 Rate 10% Year Cash Flows Present Value 0 $ - $ - 1 $15,000.00 $13,636.36 2 $ - $ - 3 $10,000.00 $7,513.15 Present value $21,150 Rate 16% Year
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Time Value of Money Introduction Time Value of Money (TVM) 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 that you have today is worth more than the promise or expectation that you will receive a dollar in the future. Money that you hold today is worth more because you can invest it and earn interest. After all, you should
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Finance FIN 1103 Week 1 Individual Work Perform Time Value Money Calculations Assignment Instructions To complete this assignment: 1. Answer all of the questions below in the space provided. 2. Reflect on the information presented in this week’s lesson and provide an insightful response to each question writing no more than two paragraphs. Save and Submit to Dropbox 1. Save your work as a Microsoft Word 2010 (.docx) file that includes your name, course code, and title in the file
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1 1) Leverage and risk. This question examines leverage. It is in the context of a personal investment in a home. However, the basic idea applies generally to investments made with borrowed money. (10) With your Masters from the University of Queensland in hand you have decided to purchase an apartment in Spring Hill. The apartment costs $200,000. A) I have calculated the percentage return on the apartment as a function of possible apartment prices next year (2nd row of the table). Apartment
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Therefore, company sales consequently reduces leading to flaws in financial forecast for the company. This is despite the companies having enough economists in their staff who often find it difficult to predict direction of economy at any point in time. Secondly, unknown competitive threats are another major challenge in financial forecasting. Unless where there is information eavesdropping, which is illegal, a company rarely knows the strategic decisions its competitors are contemplating. Any of
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TUTORIAL QUESTIONS (TIME VALUE OF MONEY) QUESTION 1 If you have a choice to earn simple interest on RM10,000 for three years at 8% or compound interest at 7.5% for three years, which one will pay more and by how much? QUESTION 2 If you wish to accumulate RM140,000 in 13 years, how much must you deposit today in an account that pays an annual interest rate of 14%? QUESTION 3 At what annual interest rate must RM124,925 be invested so that it will grow to be RM475,000 in 14 years? QUESTION
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financial decisions. 3. Apply the appropriate techniques in making decisions. | 4. | Total Student Learning Time (SLT) | Total Face to Face | Total | 5. | | L | T | P | O | A | B/O | IL | | L = LectureT = TutorialP = Practical(Lab)O= Others A= AssessmentB/O=Blended /Online learningIL= Independent learning | 28 | 14 | | | 4 | 14 | 60 | 6. | Credit Value: 3 credits | 7. | Prerequisite (if any): Nil | 8. | Learning outcomes:On completion of the course, students
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Chapter 4 Time Value of Money Solutions to Problems P4-1. LG 1: Using a Time Line Basic (a), (b), and (c) Compounding Future Value –$25,000 $3,000 $6,000 $6,000 $10,000 $8,000 $7,000 |—————|—————|——————|——————|—————|——————|—> 0 1 2 3 4 5 6 End of Year Present Value Discounting (d) Financial managers rely more on present than future value because they typically make decisions before the start of a project, at time zero, as does the present value calculation
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