Sum i = Present Value of an Ordinary Annuity 1 – 1 ⁄ ( 1 + i )N PV A = Pmt ----------------------------------i Future Value of an Ordinary Annuity ( 1 + i )N – 1 FV A = Pmt ---------------------------i Present Value of an Annuity Due 1 – 1 ⁄ ( 1 + i )( N – 1) PV Ad = Pmt --------------------------------------------- + Pmt i Future Value of an Annuity Due ( 1 + i )N – 1 FV Ad = Pmt ---------------------------- ( 1 + i ) i Present Value of an Annuity Growing at a Constant Rate (g) Pmt 1 1+g
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used in capital budgeting‚ including the techniques such as * Accounting rate of return * Payback period * Net present value * Profitability index * Internal rate of return * Modified internal rate of return * Equivalent annuity * Real options valuation These methods use the incremental cash flows from each potential investment‚ or project. Techniques based on accounting earnings and accounting rules are sometimes used - though economists consider this to be improper
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LOMA 290: Insurance Company Operations Module 1: Company Organization and Governance Chapter 1: Organization and Operations………………………………………………………………….1.1 Stakeholders in an Insurance Company………………………………………………………………………………………1.3 Owners…………………………………………………………………………………………………………………………………..1.5 Customers ............................................................................................................................... 1.5 Producers .......................................................
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Many formal methods are used in capital budgeting‚ including the techniques such as Accounting rate of return Net present value Profitability index Internal rate of return Modified internal rate of return Equivalent annuity These methods use the incremental cash flows from each potential investment‚ or project. Techniques based on accounting earnings and accounting rules are sometimes used - though economists consider this to be improper - such as the accounting rate
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Working Capital Management and Capital Budgeting Alexis A. Stoute University of Phoenix Finance for Business FIN/370 Terry Dowdy‚ PhD August 02‚ 2010 Working Capital Management and Capital Budgeting This week’s assignment focused on Working Capital Management and Capital Budgeting. As per the class syllabus‚ students were to formulate responses for questions 4-6A (Chapter 4) and 5-1A‚ 5-4A‚ 5-5A‚ and 5-6A (Chapter 5) from the book Financial Management: Principles and Applications
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project for the business also fall under the canopy of capital budgeting concept. Some of the major techniques of capital budgeting are: * Profitability index * Net present value * Modified Internal Rate of Return * Equivalent annuity * Internal rate of return Profitability Index The profitability index is a technique of capital budgeting. This holds the relationship between the investment and a proposed project’s payoff. Mathematically the profitability index is given
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Acrimonious: Nagging and bitter The acerate building towered over me. The acidity of vinegar made him vomit. The wife grew acrimonious. Anni‚ Annu‚ Enni- Year Examples: Annuity: Money paid annually Biennial: Occurrence of two years Triennial: Occurrence of three years His annuity was a good six figures. The biennial pie bake-off is being held in Reno. Arthur won the triennial marathon. Anthrop- Man Examples: Anthropic: Of mankind Anthropoid:
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the equivalent uniform series of the two projects. 3. Assuming an (effective) interest rate of 10% per annum: a. How much must be invested today in order to provide an annuity of $20‚000 per year for 4 years‚ with the first payment occurring exactly 10 years from now. b. How much must be invested today in order to provide an annuity of $10‚000 every 6 months for 4 years (8 payments) with the first payment occurring exactly 10 years from now? c. A sum of $2‚000 will be deposited into a savings account
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assets. Basic formulas and tables have been provided to assist in calculating various formulations of time value of money problems. Explanations of common financial dealings in which the time value of money is an important consideration‚ such as annuities‚ loan amortization and tax deferral options‚ are included to help illustrate the concept of the time value of money in everyday life. The time value of money is a fundamental financial principle. Its basic premise is that money gains value over
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Definition of Finance: Finance is a discipline that deals with how to get money optimally and how to use money optimally. Ten Fundamental Concepts of Finance I. Financial Institutions‚ Financial Instruments and Markets Financial System On a regional scale‚ the financial system is the system that enables lenders and borrowers to exchange funds. The global financial system is basically a broader regional system that encompasses all financial institutions‚ borrowers and lenders within the
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