060.00 63.60 $ 1,123.60 $ 1,123.60 67.42 $ 1,191.02 Time value of Money: 1. A single sum: Assume we will save $1,000 for three years and earn 6% interest compounded annually. On 1/1 in Year 1: $1,000 on Dec. 31 in Year3: $ 1,191.02 (a) Future value of a single sum = Present value * (1+ r) n Future value of $1000 after 3 years: 3 $1,000 × [1.06] = $1,191.02 (b) Present value of a single sum = Future value *( 1/ (1+ r) n ) Present value of $1,192.02: 3 $1,191.02 × (1/ [1.06] )= $1,000 Where
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Document Storage Corporation Case Analysis 1. Before maturity, a bond may be selling at the face value or at a price greater or lesser than the face value.The terms “premium” and “discount” refer to the difference that exists from the face value of the bond. Bonds selling at a price greater than the face value are said to be at a premium and the bonds selling at a price lesser than the face value are said to be at a discount. Premium or discount occurs when nominal interest rate(or coupon rate)
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premium over the current GEICO stock price of $55.75. This report attempts to determine a range of appropriate stock prices for GEICO. Using the Gordon dividend discount model, along with historical dividend information and projections by Value Line, we estimate the value of GEICO stock in the range of $58 to $80. A review of historical growth rates in GEICO dividends also lends credibility to the investment’s future potential. • Review of Warren Buffett’s investment record. While our analysis lends credence
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Introduction Prof: Beverley Belgrove Unit 2: The Value of Money Name: Khazma Alsayed Date: 29-10-2012 SOLVING FOR r Suppose you can buy a security at a price of $78.35 that will pay you $100 after fi ve years. What annual rate of return will you earn if you purchase the security? Here you know PV, FV, and n, but you do not know r, the interest rate that you will earn on your investment. Using your financial calculator, enter the known values into the appropriate locations—that is, N _ 5, PV
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will not have cash value and will only last for the stated term set forth. This is generally best for people who need insurance for a shorter amount of time until they can afford higher premiums for a different product. Whole life is the second form of life insurance. The premiums are higher than what term life would be, but over the entire life span can become cheaper than a term policy should someone need to renew the term life later in life. This will also hold a cash value, making it an investment
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Case analysis "Cost of Capital at Ameritrade" Cost of capital refers to the maximum rate of return a company must earn from its investments, so that the market values of the company’s equity shares do not go down. The people at Ameritrade are not in agreement on the best estimate of the cost of capital. Research analyst put the cost of capital at 12%, while other members of the management estimate it to be at 9% and the CFO estimates it to be at 15%. The CEO of the company is optimistic that
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FI – 360 Chapter 3 P3-1) You have $1,500 to invest today at 7 percent interest compounded annually. A - How much will you have accumulated in the account at the end of the following number of years? 1). Three years PV x (1.07)^3 $1,500 x (1.07)(1.07)(1.07) $1,500 x 1.225043 = $1837.5645 = $1,837.56 2). Six years PV x (1.07)^6 $1,500 x (1.07)(1.07)(1.07)(1.07)(1.07)(1.07) $1,500 x 1.500730351849 = $2,251.0955 = $2,251.10 3). Nine years PV x (1.07)^9
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BMT-101 Business Mathematics-I Course Teacher: Ms. Mozumdar Arifa Ahmed Problem Sheet – 5 Mathematics of Finance 1. Find the interest rate of $1000 earns $45 interest in 6 months. 2. Find the exact and ordinary interest on $2190 for 75 days at 12% interest. 3. Find the future value if $20,000 is invested at 6% for 3 months. 4. Find the present value of $1000 at 9% due 8 months from now. 5. Find the present value and the effective rate of $1000 due in 4 months at 12% interest.
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Introduce and apply Black-Scholes Option Pricing Model BP BEA3001 Financial Management 2 Coursework Test 1 Directions • Reminder: CW Test 2 [4pm Wed 20th Mar 2013] • CW Test 1: 6pm on Monday 26th November • Students entitled to extra time: STC/C • Surnames starting with letters “A” to “K” (inclusive): Amory Moot Room • Surnames starting with letters “L” to “W” (inclusive): STC/A • Surnames starting with letters “X” to “Z” (inclusive): STC/B BP BEA3001 Financial Management 3 Coursework
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based on company and market data up to 2010. Determination of the stock value will aid in the decision to recommend Walmart stock as an investment to clients. The valuation of stock is based on estimations of various parameters using various prediction models. Several models are available to aid in estimating stock prices and they are utilized herein. The dividend discount model, future dividends and a terminal value, the three-stage approach and use of P/E ratios are all utilized in this
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