at this from a savers perspective and a borrowers perspective is two different things. As a saver who like to see my money grow monthly I would definitely be a saver who would vote for monthly compounding. If for some reason there was different interest rates I would want to do the math first to get an idea of what that would mean. If someone is continuously putting money away, saving for something big and not touching it. Usually they want the most out of it possible. The saver would want
Words: 872 - Pages: 4
12% and 13% | | | between 9% and 10% | | | between 7% and 8% | 5 points Question 3 1. ------------------------------------------------- ------------------------------------------------- "Ian would like to save $1,500,000 by the time he retires in 40 years. If he believes that he can achieve a 7% rate of return, how much does he need to deposit each year to achieve his goal? " ------------------------------------------------- Answer | | "$9,692 " | | | "$27,500 " |
Words: 1092 - Pages: 5
Dr. J FINA UBUS 310 Time Value of Money Review—3 ____ 1. A perpetuity is best described as: |a. |An annuity that goes on forever | |b. |Requires the use of the CF or cash flow registers. | |c. |Contains unequal cash flows from period to period | |d. |all of
Words: 3338 - Pages: 14
SIMULATOR Bonds & Fixed Income Calculators Complete Guide To Corporate Finance Chapter One Chapter Two 3.1 Time Value Of Money 3.2 Discounted Cash Flow Valuation 3.3 Loans And Amortization 3.4 Bonds 3.5 Stock Valuation Chapter Three Chapter Four Chapter Five 3.2.1 Introduction To Discounted Cash Flow Valuation 3.2.2 Annuities And The Future Value And Present Value Of Multiple Cash Flows 3.2.3 Perpetuities 3.2.4 The Effect Of Compounding AAA | Discounted Cash Flow Valuation The
Words: 1605 - Pages: 7
website2, obtaining an USD/EURO Exchange rate of 0,7247 and an AKZ/EURO Exchange rate of 0,008. Furthermore, from now on all the values presented in this report will be expressed in Euro’s, according with the above FOREX rates; unless indicated otherwise. ° We Accessed the PIB's growth rate and inflation forecasts by the IMF Angola Report No. 11/513. For inflation the values were deduced from the consumer price index (end of period) because later on when we refer to any period we will be referring to
Words: 6672 - Pages: 27
FFinance: principles of Finance (part 1) Financial markets and management Valuation of investment Value of investment = value of investment’s cash flows * Concept of present value: value of investment = PV(CF°, CF1, CF2…) Important characteristics of cash flows: * Time: for the same amount of money, now is preferred to tomorrow * Uncertainty: risk and return (1 for sure is preferred to half a chance to get 2) Opportunity cost of capital: Definition: opportunity cost of capital
Words: 1786 - Pages: 8
46 problems (Chapters 4, 5, 10, 11) Chapter 4 PROBLEMS (p. 129) 1. An ATM service fee of $2 is used by a person 100 times in a year. What would be the future value in 10 years (use a 4 percent rate) of the annual amount paid in ATM fees? $2,401.12 = $200 x 12.006 2. What might be a savings goal for a person who buys a five-year CD paying 4.67 percent instead of an 18-month savings certificate paying 3.29 percent? A person saving for a longer-term goal such as children’s education
Words: 4538 - Pages: 19
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. 74 Part 2
Words: 2748 - Pages: 11
given investment period McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. Example 5.1 Suppose you are considering investing some of your money, now all invested in a bank account, in a stock market index fund. The price of a share in the fund is currently $100, and your time horizon is one year. You expect the cash dividend during the year to be $4, so your expected dividend yield is 4%. Your HPR will depend on the price one year from now. Suppose your
Words: 3506 - Pages: 15
I. Background Best Buy (“BBY”) sells consumer electronics such as computers, computer software, video games, music, DVDs, Blu-ray discs, mobile phones, digital camera, car stereos and video cameras, as well as home appliances (washing machines, dryers, and refrigerators). Salespersons are hired on a non-commissioned basis. Each store also includes a department for audio/visual equipment for automobiles, offering on-site installation services, as well as the Geek Squad "precinct" for computer
Words: 8799 - Pages: 36
