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Time value of money...+160019.3= $ 180,000 Question 5 In this **case**, the amount of **money** that will have accumulated in the account will be given by; Total **Value** = D/(1+r)1 +D/(1+r)2 + D/(1+r)**3** Deposit (D) = 120,000, Interest Rate = 2%, **Time** Period = 3years Therefore, Total **Value** = 120,000/(1+0.02)1 + 120,000/(1+0.02)2 + 120,000/(1+0.02)**3** =117647.059+ 115340.254+ 113078.68 = $ 346,065.9927. Conclusion From the above discussion and calculations, it is very clear that the way in which **money** changes its **value** with **time** is a very complex issue of and is very important in business and finance. The concept of **time** **value** of **money** affects all decisions that individuals and financial managers of various firms make concerning investment and other financial aspects... ?...

5 Pages(1250 words)Research Paper

Time value of money...threats so far the risk factor is considered. With simple thumb rule, I will not pay more than $1850 for the bond of this company that will fetch me around $2,000 after a year from this company. (Future **value**, FinanceProfessor.com) Answer 2. Cash flow (maturity **value**) available in this **case** is $2,000 The **time** period is one year for which it is required to find the present **value**, which is given as PV = CF * 1/ (1+r)t PV= 1,850 CF= 2,000 t=1, putting these **values** in the equation, it can be solved for r (discount rate), which will give us applicable discount rate. 1+r= CF/PV 1+r=2000/1850=1.08 or r=0.08 Hence discount rate for this bond is...

3 Pages(750 words)Research Paper

Time Value of Money...in various investment options which will increase the amount. Moreover, there is also an opportunity cost that is associated with the cash that is received later. This is the cost of the best foregone opportunity that could have been taken with the cash available (Econedlink.org, 2011). Cash received later can’t be used for any investment options present at the current **time** frame. The concept finds significant applications in the area of **capital** **budgeting**, lease versus buy decisions, accounts receivable analysis, financing arrangements, mergers and pension funding (Ross et.al., 2007, pg. 60). The concept of **time** **value** of **money** is used in...

4 Pages(1000 words)Essay

Time Value of MOney...?**Time** **Value** of **Money** The situation that a client of the company is facing is whether to buy a fixed income security i.e. bond, which will pay $ 1000000 a year from today. The detailed features of the bond, whether it is a coupon paying bond or a zero coupon bond is not known. However, **Time** **Value** of **Money** analysis needs to be conducted in order to find out what payment should be made for the bond now in order to get back $ 1000000 after one year. However, there are significant other factors that need to be considered while conjuring up to the present **value** of the bond. Before calculating the discount rate and...

3 Pages(750 words)Research Paper

The Time Value of Money...The **Time** **Value** of **Money** What is **Time** **Value** of **Money** To understand **time** **value** of **money**, suppose that you are offered two options. You can take $ 10000 today or $10000 five years from now. Which one should you choose Many of us would accept the first option since it will provide us with the $ 10000 today and we humans, being impatient would not want to wait for **3** years for this $ 10000.
Although, our decision is correct in financial terms, what we fail to understand is that the $ 10000 received today will not be equal to $ 10000 received five years from now because the $...

4 Pages(1000 words)Essay

Time Value of Money...Where P is the principal amount, i is the interest rate and n is the periods for which the investment is made. With increasing interest rates, the future **value** also keep on increasing. With changing interest rates, the above formula would be applied separately for the different rates.
Present **Value**
The present **value** of a future investment can also be calculated keeping in mind the **time** **value** of **money**. The present **value** of a future investment is the current **value** of that payment that is to be received in the future. Discounting is the process that is employed in this **case**. This is the...

3 Pages(750 words)Essay

Time Value of Money Calculations...**Time** **Value** of **Money** Introduction The creation of added **value** is the main objective of investing in projects. Updating the server population may benefit the IT department and by extension the organization in some way. However, the cost of doing so may outweigh this benefit and so may not create added **value** for the company. It therefore means that the project must be evaluated to determine its profitability. In order to determine whether or not a project is beneficial or whether one project is more beneficial than another a number of project evaluation techniques are available for use in making decisions.
Project Evaluation Techniques
**Capital** **budgeting** decisions are based on an evaluation of the cash flows expected from investing... of...

3 Pages(750 words)Assignment

Time value of money...**TIME** **VALUE** OF **MONEY** **Time** **value** of **money** is a term that measures the increase or decrease in the **value** of **money** with respect to **time**. The buying powerassociated with certain amount of **money**; do change as the **time** passes and multiple factors such as inflation, exchange rates, interest rate and other fluctuations economic conditions come into play. Two factors are central in this concept; present **value** and future **value** of **money** (Homer and Leibowitz, 269-276).
One of the important financial decisions that...

1 Pages(250 words)Essay

Time Value of Money...on the investor in the **case** where they decide to surrender the given contract (annuity) within the first 5 to 10 years, depending on the duration of the given annuity.
**3**. Lack of **Capital**-Gain Treatment: the taxes levied on annuities treat all profits or gains as ordinary income
Question **3**
The future **value** of the annuity can be obtained by using the future **value** formula in excel.
Given:
Cash flows per period (C) = $10,000
Number of years in cash flows = 5
The Number of compounding periods per year = 1
Number of periods = 5 * 1 = 5
Discount Rate per Period = 5%
Future **Value** Calculator
Enter the type of cash flow that you...

3 Pages(750 words)Coursework

Time Value of Money _...**Time** **Value** of **Money** Affiliation “Take heed if your are buying or selling annuities”, is an article that provides an imformatic look at the ever changing regulatory landscape, and its relation to annuity products. It also elaborates on the responsibilities a fiduciary has when it comes to selling these products to a client. The article discusses the criteria, legal factors and issues an attorney has to consider as a trust fiduciary on annuity investments in the US.
Various federal and state rules have been trying to narrow down the sale of equity indexed annuities to suitable investors. It is important that lawyers should note the key issues in annuity sale and investment. The relationship between a trustee and the beneficiaries... that the...

3 Pages(750 words)Essay