Management – Risk and Return Copyright © 1996-2006 Investment Analytics 1 Time Value of Money Simple vs compound interest Daycount methods Discounting principles Copyright © 1996-2006 Investment Analytics Portfolio Management – Risk & Return Slide: 2 Time Value of Money Basic principle Money received today is different from money received in the future This difference in value is called the time value of money When we borrow or lend‚ this difference is reflected by the interest
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have different views on the value of life. Just like religion‚ people believe differently. In some of the texts and a play I have read‚ I have gained different insights on how one should value life. Inevitably‚ though‚ when it comes to whether putting a dollar sign on the value of a person’s life‚ however‚ the question of where the line should be drawn must be asked. All people are created equal‚ but when they pass away does there have to be a difference in the value of their live? Hamlet‚ written
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First Name: ID Number: COURSE FINANCE NUMBER COMM 308 SECTIONS: ( Circle your section) AA‚ AB DATE EXAMINATION June 18‚ 2012 Final Exam VERSION BLUE INSTRUCTOR: ( Underline your instructor’s name) Rahul Ravi Jay Mannadiar # OF PAGES 17 TIME Including cover 3 hours 19:00 to 22:00 DIVISION John Molson School of Business Concordia University READ THESE SPECIAL INSTRUCTIONS CAREFULLY ‐ You must submit a BLUE computer answer sheet. ‐ You are allowed to bring/use one or more calculators
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| | | | | Total Capital employed | 41209.34 | | | 20.68206076 | THE GORDON GROWTH MODEL The Gordon growth model‚ developed by Gordon and Shapiro‚ assumes that dividends grow indefinitely at a constant rate. Here‚ Vo = Value of the share r = Required rate of Return g = Dividend growth rate For our calculation we have taken‚ * Required Rate of return as Cost of Capital * Dividend growth rate as CAGR of last 8 yrs dividend rate * CAGR of Dividend (last
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advertising campaign that promises to yield $120 one year from now for $100 spent now. Explain why the firm should not undertake the advertising campaign. Because of the Time Value of Money; the $120 might have a Present Value that is lower than the $100 spent now‚ therefore the campaign would have a negative Net Present Value and should not be undertaken. 5.) Determine which of two investment projects a manager should choose if the discount rate of the firm is 10 percent. The first project promises
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improvements‚ and modest market expansions. By doing so‚ the shareholders will retain their shares and not make them available to raiders like Carlo de Bendetti or the Flick brothers. Earnings per share‚ dividends‚ and shareholders’ equity (market value) will‚ therefore‚ become critically important in 1993. Earnings per share refers to the portion of a company’s profit allocated to each outstanding share of common stock and serves as an indicator of a company’s profitability. Dividends refer to
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fixed and it remain constant example of this are rent and salaries. TIME VALUE OF MONEY It is the value of money in the future its either in the form of productive assets such as equipment or they place in their money in interest-bearing like savings. FUTURE VALUE The amount of the money should expect in the future. And it is all about the capital or principal and the interest of the money. PRESENT VALUE It is the present value of money for us to know how much we need today to purchase the certain
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Purpose Formula Basic Time Value Formulae Future Value of a Single Sum FV = PV ( 1 + i ) N Present Value of a Single Sum FV PV = -----------------( 1 + i)N Solve for N for a Single Sum FV ln ------PV N = --------------------ln ( 1 + i ) Solve for i for a Single 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
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Sets Chapter 5 A1. (Bond valuation) A $1‚000 face value bond has a remaining maturity of 10 years and a required return of 9%. The bond’s coupon rate is 7.4%. What is the fair value of this bond? Calculating PV factor: i= required return = 9% = 0.09 n= 10 years Using Cash Flow of $1000 to calculate present value‚ Cash flow= $1000 PV factor = 1/(1+i)^n = 0.42241 PV = $1000*0.42241= 422.41 Using Coupon Rate to calculate present value of Annuity Cash flow= $1000 * 7.4/100 = $74 PV factor
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accessible and complete. This report contains financial data‚ historical analysis‚ forecasts and estimates based on best available and most up to date information. The aim is for the reader to be able to make an informed decision about the fair value of GFF stock and compare it to GFF peers in the industry. It should give reader the ability to form an opinion on Goodman fielder as an investment based on financial information analytics. 1 Executive summary Goodman fielder is
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