Cite all resources consistent with APA guidelines. Term Definition Resource you used Time value of money The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that‚ provided money can earn interest‚ any amount of money is worth more the sooner it is received Investopedia - Time Value of Money - TVM. (2014). Retrieved from http://www.investopedia.com/terms/t/timevalueofmoney
Premium Information asymmetry Principal-agent problem Rate of return
1- In a few phrases‚ describe the situation of the Roberto and Chez Léon chain. 2- Without the Chez Léon chain‚ would you think that the Roberto chain has a positive‚ nil or negative value? 3- What are the foundations of value for Chez Léon? 4- Given the objectives of the Italian State‚ would you recommend that the sale be completed: a. On an open bid basis? b. Via a private negotiation‚ selecting the most obvious candidates? Why
Premium Stock Stock market Italy
are able to maintain controlrelatively high‚ explicit after-tax costdecreased earnings per share through using financial leveragenone of the aboveall of the above 2. The ____ the investor’s required rate of return on a bond‚ the ____ will be the value of the bond to the investor. (Points : 3.71) higher‚ lowerhigher‚ highernone of the above 3. George is 45 years old today and is beginning to plan for his retirement. He wants to set aside an equal amount at the end of each of the next 15 years
Premium Preferred stock Bond Bonds
shelter provided by things other than debt‚ such as __________. 10) Preferred stock payment obligations are typically 11) If the yield to maturity for a bond is less than the bond’s coupon rate‚ then the market value of the bond is __________. 12) Assume that the par value of a bond is $1‚000. Consider a bond where the coupon rate is 9% and the current yield is 10%. Which of the following statements is true? 13) Certain countries have restrictions. In practice‚ U.S. investors have NOT
Premium Net present value Bond Investment
cash flows that Polaris must earn from these projects to have a 10% internal rate of return? Solution 1:Initial Investment=$2.12 million=$212000 Time Period (n) =10 years At IRR‚=10%‚Net Present Value of Investment=0 i.e. Present Value of 10 years Cash Flow-Initial Investment=0 Initial Investment =Present Value of 10 year Cash Flow We will get Present value of 10 year equal cash flow(CF) using annuity formula Initial Investment=CF*(1-(1+IRR)^(-n))/IRR $212000=CF*(1-(1+10%)^(-10))/10% CF=$212000*10%/(1-0
Premium Cash flow Net present value Internal rate of return
insured and it is thought prudent to insure the stock in future. The insurance premium is estimated at Rs.500 p.a. (e) Fair remuneration to the proprietor [not taken in the calculation of profits] is Rs.10‚000 p.a. You are required to compute the value of goodwill on the basis of 2 years purchase of average profits of the last three years. 3) The following is the Balance sheet of the Excellent Traders‚ a concern owned by Rama as at 30th April‚ 2009: Balance Sheet LIABILITIES AMOUNT ASSETS AMOUNT
Premium Generally Accepted Accounting Principles Balance sheet Investment
Selecting projects based on a value-maximizing acceptance criterion; and Continually reevaluating implemented investment projects. * Since CASH is central to all decisions of the firm‚ the expected benefits to be received from the project is expressed in terms of Cash Flows and not income flows. Cash flows should be measured on an incremental‚ after-tax basis. * a) include all cash flows that occur during the life of the project * b) consider the time value of money * c) incorporate
Premium Net present value Internal rate of return Rate of return
Some scholars in Islamic economics argued that the concept of time value of money is a key to the door or riba which is prohibited in Islam. However‚ some scholars are of the opinion that time value of money is a concept valid in Islamic economics. What are your opinions on this issue? DISCUSSION: Islam prohibits riba because riba deprives justice and discourage people from undertaking real economic activities. Profit earned from money that is loaned to debtor is considered as interest or usury
Premium Economics Interest Qur'an
Time Now 1 End of 2 years Borrower 0 End of 1 year Lender 2 $100 is loaned out $120 is received back The extra $20 is the lenders compensation for foregoing current consumption to obtain future consumption. The lender requires compensation for: Financial Math Support Materials Page 3 of 85 THE “TIME VALUE” OF MONEY CONSIDER A CHOICE OF $100 NOW‚ OR $100 LATER ANY RATIONAL PERSON WOULD CHOOSE $100 NOW! BUT WHY? “MONEY HAS A TIME VALUE”
Premium Compound interest Interest Time value of money
(DVM) The dividend valuation model is based on the fact that the market value of the ordinary shares represents the sum of the expected dividend flows discounted to present value. The model works on the premise that the shareholder will expect two different types of return: income from dividends and a capital gain from the future sale of the share for an inflated price. If we assume that the dividends do not change over time we can use the following formula. [pic] Unlike this model‚ most companies
Premium Stock market P/E ratio Dividend