when you actually win? Normally the answer appears to be "take all the money up front immediately and subsequently squander every available penny on frivolous crap." But what if someone won the lottery and then tried to handle it as rationally as possible? The key question we wanted to investigate is whether a winner should take all the cash up front or whether one should take the annuity, which consists of more money spaced out over several years. 1. If you were one of the winners, which
Words: 1297 - Pages: 6
decide if giving up two years of paid work will be worth it in the long run to go back to graduate school to obtain his MBA. If he goes back to school at this age he will be giving up on a 3 percent increase over a two year period. He will also lose money that could go into his retirement fund. Ben has also been out of school for 6 years. Will he be able to return to the school environment and adapt as easily as he did for his undergraduate degree? 2. What other, perhaps nonquantifiable factors
Words: 1587 - Pages: 7
not constitute an annuity. However, the entire series does not contain an annuity. Is this statement true or false? A: The above statement is true because annuity is a series of payment at fixed intervals over a fixed number of years or over a life time. To be annuity it is necessary to be fixed amount. The second series is irregular cash flow but still constitute series of an annuity. 4-4 If a firm’s earnings per share grew from $1 to $2 over a 10-year period, the total growth would be 100%, but
Words: 760 - Pages: 4
should understand these keystrokes before you begin work on statistical or TVM functions. Please note that your calculator’s sign convention requires that one of the TVM inputs ([PV], [FV], or [PMT]) be a negative number. Intuitively, this negative value represents the cash outflow that will occur in a TVM problem. 1. To set the number of decimal places that show on your calculator: [2nd]→[FORMAT]→{Desired # of decimal places}→[ENTER]→[CE/C] For the exam, I would make sure that the number of decimal
Words: 2517 - Pages: 11
savings of 600.00 without any guarantee of quality and timeliness of delivery over Juan’s assurance of quality and timely delivery. The choice is made and we can surmised that COST matters and quality is sacrificed it’s because of how one person values is influenced in our decision . 2. Implications of Frequent Interest Payment . Assume that I invested P5,000.00 @ 12% per annum. Assumption : | | Rate | 12% | | | Investment | 3,000.00 | | | | | a. Annually | | FV = 3
Words: 774 - Pages: 4
type) Rate is the interest rate per period. Nper is the total number of payment periods in an annuity. Pmt is the payment made each period; it cannot change over the life of the annuity. Pmt must be entered as a negative number. Pv is the present value, or the lump-sum amount that a series of future payments is worth right now. If pv is omitted, it is assumed to be 0 (zero). PV must be entered as a negative number. Type is the number 0 or 1 and indicates when payments are due. If type is omitted
Words: 2368 - Pages: 10
CHP.3. THE TIME VALUE OF MONEY 1. What is the future value of $10,000 on deposit for five years at 6% simple interest? A) $7,472.58 B) $10,303.62 C) $13,000.00 D) $13,382.26 Answer: C Difficulty: Medium Page: 59, 6th paragraph. FV = PV + (PV x r x t) (10,000) + ((10,000 x .06) x 5) = $13,000.00 2. How much will accumulate in an account with an initial deposit of $100, and which earns 10% interest compounded quarterly for three years? A) $107
Words: 681 - Pages: 3
Friday), Jason will be making $20 a week. After doing further calculations, Greenblatt and his son figure out how much Jason could make if he sold 4 packs of gum every day until he graduated the 12th grade. By using this information, Greenblatt puts a value on Jason’s business and asks the reader how much they would pay for Jason’s business. He uses the idea of Jason’s business throughout the rest of the book. Every new concept that Greenblatt introduces, he comes back to Jason’s business and gives
Words: 1061 - Pages: 5
2-1 a. PV- Present Value, the beginning amount. Int- Interest per year FV- Future Value or ending amount in an account where N is the number of periods the money is left in the account. PVA- Present value annuity FVA- Future value annuity and the ending value of a stream of equal payments. PMT- Payment M- Number of compounding period per year I nom- The nominal , or quoted, interest rat b. Opportunity cost rate- is the rate
Words: 518 - Pages: 3
Chapter 2: Time Value of Money Practice Problems FV of a lump sum i. A company’s 2005 sales were $100 million. If sales grow at 8% per year, how large will they be 10 years later, in 2015, in millions? PV of a lump sum ii. Suppose a U.S. government bond will pay $1,000 three years from now. If the going interest rate on 3‐year government bonds is 4%, how much is the bond worth today? Interest rate on a simple lump sum investment iii. The U.S. Treasury offers to sell you a bond for $613
Words: 711 - Pages: 3
