correct concerning these two annuities? | A. | These two annuties have equal present values but unequal futures values at the end of year five. | | B. | These two annuities have equal present values as of today and equal future values at the end of year five. | | C. | Annuity B is an annuity due. | | D. | Annuity A has a smaller future value than annuity B. | | E. | Annuity B has a smaller present value than annuity A. | 10 points QUESTION 4 1. How is the principal amount of an
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February 29 at Midnight. Make sure your name is on all file titles. Question #1: WACC & Capital Budget Analysis (Chapters 9-10-11) – 75% Based on the inputs below prepare a capital budget analysis for this Base Case using the Net Present Value, Internal Rate of Return, Profitability Index and Payback in years methods, determining whether the project is feasible. Please show your spreadsheet calculations and your final determinations of “go” or “no go” on the project. Use your Capital Budget
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variables of the time value of money (TVM) equation are: FV = future value PV = present value r = interest rate, yield, discount rate or growth rate n = the time period between the present value and the future value These variables can be arranged in several ways to solve many questions about money. The most basic form of the equation is FV = PV x (1+r)^n Example: if I have $1,000.00 in my bank account today earning 5% interest for a period of 10 years, what is the future value? FV = 1000
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to Find the Value of a Dividend Stock A dividend growth discount model provides a simple approach to value a stock with dividends that grow at a stable rate. Definition of 'Gordon Growth Model' A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. Given a dividend per share that is payable in one year, and the assumption that the dividend grows at a constant rate in perpetuity, the model solves for the present value of the infinite
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Topic 1: Financial Markets 1. (a) From the viewpoint of the market maker: On the 4,000 shares: (4,000*102 1/2) – (4,000*102 1/4) = $1,000 Value of the inventory at the end of the day: (-6,000*102 1/4) = -$613,500 -Inventory is priced as the cost of goods sold, so the -6,000 shares are priced at the bid, at which the market maker bought the shares. (b) Profit from day 1: (6,000*102 1/2) = $615,000 -6,000 additional shares were sold day 1 at the ask price of 102 1/2; therefore, the profit from
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treasurer’s and the controller’s work. D) None of the above. Chapter 2 Present Values, the Objectives of the Firm, and Corporate Governance Question 2 According to the net present value rule, an investment in a project should be made if the: A) Net present value is greater than the cost of investment B) Net present value is greater than the present value of cash flows C) Net present value is positive D) Net present value is negative Question 3 Mr. Free has $100 dollars income this year and zero
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future value. * Most interest transactions are described by the rate of interest, which is the ratio of the interest earned in one time unit to the principal. * Using the method of simple interest, the interest due t be paid at the end of the loan is based on the original principal, the term of the loan and the stated rate of interest * For these calculation the following notation is used * P= principal * I= the total simple interest * S= the future value, or maturity
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*Find the compound amount for each deposit and the amount of interest earned Ex22 15ooo$ at 6% compounded monthly for 10 years The principle is P=$15000 The interest rate per month is i=r/12=0.06/12 The number of years is t=10 so the future value is A=P(1+r/n)^n.t= 15000(1+0.06/12)^12.10= 27290.95$ With n is number payment period of the year GENERAL FOMULAR I=A-P SIMPLE INT: I=Prt A=P(1+rt) COMPOUND INT: A=P(1+i)^m=P(1+r/n)^nt with m=n.t *Find the interest rate for the given deposit
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To what extent is NPV an effective Investment appraisal tool? Capital Budgeting: To understand the value of NPV, the identification of its purpose in capital budgeting should be addressed beforehand, with its alternatives. This process of Capital Budgeting refers to the evaluation of potential in large scale business expenses and investments over long-term ventures. Often this step in the investment appraisal assessment, identifies the cashflows over the projects life-span, determining its generated
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Usually they want the most out of it possible. The saver would want monthly compounded interest. By the end of 12 months compounded they will be so happy they did not touch it, but they were able to see the fruits of their labor through that year time frame. Usually the savers like to see what they are doing and this make that possible. They are almost getting rewarded each month for putting in more money and making their overall finances grow. The bower on the other hand usually has plans
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