Wk3Discussion

1) Which of the following statements about time value of money is not correct?   Present value of money is today's value of money.   Money grows with interest and time.    Value of $1 today is greater than tomorrow.   Value of $1 today is less than tomorrow.  2) The present value of a lump sum is:   today's value of expected cost savings in the future.   today's value of a total future cash flow.   today's value of multiple equal payments in the future.   today's value of a single payment in the future.  3) ACE Company acquired $500,000 to construct a new warehouse. To obtain this fund, the company issued 3,000 preferred stocks with $100 par value and 8% dividend rate for $300,000 and bonds for $100,000 with 5% interest, and borrowed the rest from its bank with 6% interest rate. The company requires a 3% buffer margin.  What is the required rate of return on this project?    7%   12%   10%   13.9%   10.9%

A dollar today is worth more than a dollar to be received in the future. The difference between the presentvalue of cash flows and their future value represents the time value of money. Interest is the rent paid forthe use of money over time.

Time value of money calculations can be solved using a mathematical equation, a financial calculator, or a spreadsheet. Which of the following equations can be used to solve for the future value of an annuity due? PMT x {[(1 + r)ª − 1]/r} x (1 + r) O FV/(1 + r)¹ PMT x {[(1 + r)" - 1]/r} O PMT x ({1 - [1/(1 + r)"]}/r) x (1 + r)

The time value of money is a financial concept that focuses on the idea that a dollar today will be worth more in the future. There are two key time value concepts: present value and future value. Looking at future value, the concept is that an amount in hand today will grow if it earns a specific rate of interest over a given period of time. This growth in value occurs not just because of the rate of interest being earned each year but also because that earned interest compounds. In other words, the interest earned in year one is added to the principal in year two, and interest is earned on this new principal balance; this continues through the set period of time. Work through the following scenario to understand future value and the concept of compounding interest. You have an eccentric aunt who has promised to deposit $7,125 in a savings account in your name. She has stated that you will not have access to the money for three years but that the money will be earning 7% interest. At…

The present value represents the amount of money you would have to deposit today in order to match what you would get from the income stream at the future date. The formula is Time = M = i Future value represents the total amount of money you would have if you deposit the income stream until a future date. The formula is To start our problem we need to identify the variables. Rate =r= i Income Stream S(t) = i Present Value = years % M 1. 0 S (t) et dt. Future Value = Present Value* erM dollars/year

4. Future value of annuities There are two categories of cash flows: single cash flows, referred to as "lump sums," and annuities. Based on your understanding of annuities, answer the following questions. Which of the following statements about annuities are true? Check all that apply Ordinary annuities make fixed payments at the beginning of each period for a certain time period. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. An annuity due earns more interest than an ordinary annuity of equal time. An annuity is a series of equal payments made at fixed intervals for a specified number of periods Which of the following is an example of an annuity? 0 A job contract that pays a regular monthly salary for three years O A job contract that pays an hourly wage based on the work done on a particular day Katie had a high monthly food bill before she decided to cook at home every day in order to reduce her expenses. She starts to…

Anyone?!?!

7. Future value of annuities There are two categories of cash flows: single cash flows, referred to as “lump sums,” and annuities. Based on your understanding of annuities, answer the following questions. Which of the following statements about annuities are true? Check all that apply. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period.   Ordinary annuities make fixed payments at the beginning of each period for a certain time period.   An annuity is a series of equal payments made at fixed intervals for a specified number of periods.   An annuity due earns more interest than an ordinary annuity of equal time.     Which of the following is an example of an annuity? A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time   An investment in a certificate of deposit (CD)     Katie had a high monthly food bill…

7. Future value of annuities There are two categories of cash flows: single cash flows, referred to as “lump sums,” and annuities. Based on your understanding of annuities, answer the following questions.   A. Which of the following statements about annuities are true? Check all that apply.   An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period.   Ordinary annuities make fixed payments at the beginning of each period for a certain time period.   An annuity is a series of equal payments made at fixed intervals for a specified number of periods.   An annuity due earns more interest than an ordinary annuity of equal time.     B. Which of the following is an example of an annuity?   A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time   An investment in a certificate of deposit (CD)     C. Luana loves shopping…

The time value of money takes all of the following into consideration EXCEPT a.Inflation b.the number of compounding periods per year c.The total number of years d. the present value of money

I already have the values I just need someone to explain the calculations, such as what numbers are used to get the future values in each problem. Specifically how to multiply the annuities and interest rates to get the future values and for the last one explain how it is calculated with the interest after the annuity due stops

Finding a present value is the reverse of finding a future value. Which of the following is true about finding the present value of cash flows? O Finding the present value of cash flows tells you what a cash flow will be worth in future years at a specified rate of return. O Finding the present value of cash flows tells you how much you need to invest today so that it grows to a given future amount at a specified rate of return. Which of the following investments that pay will $15,500 in 8 years will have a lower price today? O The security that earns an interest rate of 5.50%. O The security that earns an interest rate of 8.25%. Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 6.80%. Assuming that both investments have equal risk and Eric's investment time horizon is flexible, which of the following investment options will exhibit the lower price? O An investment that matures in six…

Please kindly answer if it's true or false: 1) Since individuals are always confronted with opportunities to earn positive rates of return on their funds, the timing of cash flows does not have any significant economic consequences. 2) Time-value of money is based on the belief that a dollar that will be received at some future date is worth more than a dollar today. 3) Future value is the value of a future amount at the present time, found by applying compound interest over a specified period of time. 4) For a given positive interest rate, the future value of $100 increases with the passage of time. Thus, the longer the period of time, the greater the future value. 5) The greater the interest rate and the longer the period of time, the higher the present value.

1. Basic concepts Finance, or financial management, requires the knowledge and precise use of the language of the field. Match the terms relating to the basic terminology and concepts of the time value of money on the left with the descriptions of the terms on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term. Term Discounting Time value of money Amortized loan Ordinary annuity Annual percentage rate Annuity due Perpetuity Future value Amortization schedule Opportunity cost of funds Answer — Description A. A series of equal (constant) cash flows (receipts or payments) that are expected to continue forever. The name given to the amount to which a cash flow, or a series of cash flows, will grow over a given period of time when compounded at a given rate of interest. An interest rate that reflects the return…

The website is www.moneychimp.com. THE ANSWER MUST BE CORRECT.

If you are compounding a cash flow, you are ________. A: Finding a future value B: Finding a present value C: Multiplying a future cash flow by the number of years it is from the present D: None of the abov

What do current liabilities and current assets have in common?a) Current assets are claims against current liabilities.b) If current assets increase, then there will be a corresponding increase in currentliabilities.c) Current liabilities and current assets are converted into cash.d) Current liabilities and current assets are those items that will be satisfied andconverted into cash, respectively, in one year or one operating cycle, whichever islonger.

3. Present value Finding a present value is the reverse of finding a future value. Which of the following is true about finding the present value of cash flows? Finding the present value of cash flows tells you how much you need to invest today so that it grows to a given future amount at a specified rate of return.   Finding the present value of cash flows tells you what a cash flow will be worth in future years at a specified rate of return.     Which of the following investments that pay will $18,500 in 8 years will have a higher price today? The security that earns an interest rate of 8.50%.   The security that earns an interest rate of 12.75%.     Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 13.80%. Assuming that both investments have equal risk and Eric’s investment time horizon is flexible, which of the following investment options will…

Help Save & The difference between an ordinary annulty and an annulty due Is: Multiple Choice an ordinary annuity represents a present value and an annuity due represents a future value. an ordinary annuity represents a future value and an annuity due represents a present value. an ordinary annuity assumes the cash flows occur at the beginning of the period and an annuity due assumes the cash flows occur at the end of the period. an ordinary annuity assumes the cash flows occur at the end of the period and an annuity due assumes the cash flows occur at the beginning of the period.

Compute the following:

4. Futurevalue of annuities II There are three categories of cash flows: single cash flows, also referred to as “lump sums,” a stream of unequal cash flows, and annuities. Based on your understanding of annuities, answer the following questions. Which of the following statements about annuities are true? Check all that apply. An annuity due earns more interest than an ordinary annuity of equal time. An annuity due is an annuity that makes a payment at the end of each period for a certain time period. Ordinary annuities make fixed payments at the end of each period for a certain time period. A perpetuity is a constant, infinite stream of equal cash flows that can be thought of as an infinite annuity. Which of the following is an example of an annuity? A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time An investment in a certificate of deposit (CD) Becky has a large and growing…