Amount 1 Rs. 3000 2 Rs.5000 3 Rs.7000 4 Rs. 10000 Q.4 What is the present value of a 4-year annuity‚ if the annual interest is 5%‚ and the annual payment is $1‚000? Q.5 You are given the option of receiving $1‚000 now or an annuity of $85 per month for 15 months. Which of the following is correct? a. You cannot choose between the two without computing present values. b. You cannot choose between the two without computing future values
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Time Value of Money (TVM)‚ developed by Leonardo Fibonacci in 1202‚ is an important concept in financial management. It can be used to compare investment alternatives and to solve problems involving loans‚ mortgages‚ leases‚ savings‚ and annuities. TVM is based on the concept that a dollar today is worth more than a dollar in the future. That is mainly because money held today can be invested and earn interest. A key concept of TVM is that a single sum of money or a series of equal‚
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TIME VALUE OF MONEY INTRODUCTION This module or note is created to provide students with step-by-step explanation and discussion on time value of money that mainly based on formulas instead of time value of money tables. The reason is so that students are able to answer all sorts of questions that involve interest rates and time period that are not available in the tables. OUTLINE OF THE NOTE A. Simple Interest B. Compound Interest 1. Single Amount • Future Value • Present Value
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Fin 3322 Time Value of Money Homework 1. Your local travel agent is advertising an extravagant global vacation. The package deal requires that you pay $5‚000 today‚ $15‚000 one year from today‚ and a final payment of $25‚000 on the day you leave two years from today. What is the cost of this vacation in today’s dollars if the discount rate is 6%? 2. The tax rates are as shown. Your firm currently has taxable income of $79‚000. How much additional tax will you owe if you increase your taxable
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Time Value of Money Danielle Kaplan B6022-P A01 Calculate the future value of 100‚000 ten years from now based on the following annual interest rates 2 ( 100‚000 x (1.02)10 121‚899 5 ( 100‚000 x (1.05)10 162‚899 8 ( 100‚000 x (1.08)10 215‚892 10 ( 100‚000 x (1.10)10 259‚374 Calculate the present value of a stream of cash flows based on a discount rate of 8. Annual cash flow is as follows Year 1 100‚000 ( 100‚000 / (1.08) 92‚592 Year 2 150‚000 ( 150‚000 / (1.08)2 128‚600 Year 3 200
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How does your identity make different? Everyone is special in their own way‚ all though they can be similar. My favorite color is purple‚ I’ve met people who dislike purple. Before I walked into high school I was considered a tall person at 5’4 ‚but now I’m short compared to other people. When I was younger I used to live on a farm in South Carolina‚ my best friend was a chicken named May. I see myself getting better grades‚ completing all my homework on time. While I attend Drew I would like to
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My hometown is Lahore. I was born in Lahore and I like it a lot. Lahore is a very important city in Pakistan because it is the capital city of the largest province in Pakistan. Right now I am living in my hometown and I wish live over here for the rest of my life. Lahore is a very big city with wide and beautiful roads. Lahore is also regarded as the educational hub of Pakistan as there are many educational institutes in Lahore. Lahore also has its significance for the fact that it was a very important
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Is cryptocurrency a better option than traditional money? For cryptocurrency to become wildly accepted there needs to be a reason to pick it over traditional money. Why would anyone choose to use for example Bitcoin in daily life? To answer this question we will be using Table 1.0 and the examples of Gold‚ US Dollar and Bitcoin. 1. Fungible (Interchangeable) The first trait money should have is fungibility‚ this basically means that one $10 bank note is interchangeable with another. It is also interchangeable
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From time to time people like to take vacation and enjoy their time in quiet and peaceful places. Then they start to plan to their vacation by choosing the season‚ place and collecting the information about it. In addition‚ to the cost of that vacation‚ the budget is a very important issue to decide the possible destination. Every one looks to the dream vacation but we have to adapt it to our budget. The people with a low budget have limited choices or ability to enjoy their vacation in
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The University of Phoenix simulation “Utilizing the Time Value of Money” focused on the financial principles used to evaluate and determine whether to outsource manufacturing or to invest in in-house operations. The simulation depicted real-life examples of how investment choices impacts the Net present value (NPV)‚ internal rate of return (IRR)‚ and cost of capital. The objective of the simulation was to apply time value of money principles to evaluate the investment alternatives of Cracker Pop
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