Time Value of Money and Present Value - 1154 Words

Date: 14/11/2012 52. Annuities: You are saving for the college education of your two children. They are two years apart in age; one will begin college 15 years from today and the other will begin 17 years from today. You estimate your children’s college expenses to be $23,000 per year per child, payable at the beginning of each school year. The annual interest rate is 5.5 percent. How much money must you deposit in account each year to fund your children’s education? Your deposits begin one year from today. You will make your last deposit when your oldest child enters college. Assume four years of college Solution: Cost of 1 year at university = 23,000 N=4 I=5.5% PMT=23,000 CPT PV =†¦show more content†¦Solution: The price of a bond is equal to PV of expected future cash flows Bond M: Face value 20,000 Present value of 20,000 = 20,000/ (1.05) ^40 = $2,840.91 First we need to get the present value of the annuity for the 1,500 semiannual PMTs at year 14 Present Value of Annuity = $13,295 $13,295 becomes $3,391 at year 0 We then get the annuity of the 1,200 semiannual PMTs at year 6, and then at Present Value $13,005 at year 6 with a PV of $7,242 at year 0 The sum of the 3 PV’s gives us the value of the bond 2,841 + 3,391 + 7,242 = $13,474 Bond N Face value 20,000 Present value of 20,000 = 20,000/ (1.05) ^40 = $2,840.91 38. Non-constant growth: Storico Co. just paid a dividend of aud 3.5 per share. The company will increase its dividend by 20% next year, and will then reduce its dividend growth rate by 5% per year, until it reaches the industry average of 5% industry average growth, after which the company will keep a constant growth rate forever. If the required return on Storico stock is 13%, what will a share of stock sell for today? Solution : D0 = $3.5 D1= 3.5*1.2= $4.2 D2= 4.2*1.15= $4.83 D3=4.83*1.1= $5.31 D4=5.31*1.05= $5.58 Since the first 4 periods are different we get the PV of each one alone, then as of the 4th year we get the perpetuity of the rest, and sum them up to get the final NPV WeShow MoreRelatedWeek 5 Reflection Essays680 Words   |  3 PagesReflection The concept of time value of money is accounting is the relationship between time and money (Kieso, Wygandt, amp; Warfield, 2007). The common expression is that money today is worth more than the assurance of money received tomorrow. The reason for this saying is the investment opportunities and borrowing options. Understanding how to compare present and future values of money and learning how to use the different time values of money is important in accounting and the differentRead MoreThe Time Value of Money875 Words   |  4 Pagesdiscuss the time value of money, and illustrate that I understand the concept. First, there will be an explanation of the key concepts of time value of money, including why it is important to know what these concepts are and how they are applied to the real world. The report will also contain several calculations made using present and future value tables. The calculations illustrate that not only do I understand the concepts but that I c an apply them to mathematical computations. 1. The time valueRead MoreFactors That Affect the Time Value of Money1100 Words   |  5 PagesFactors that Affect the Time Value of Money Time value of money is the concept that an amount of money in one s possession is worth more than that same amount of money promised in the future (Garrison, 2006). The reason for this is that money today can be invested to earn interest and therefore will be worth more in the future (Brealey, Myers, Marcus, 2004). This paper will explain how annuities affect time value of money (TVM) problems and investment outcomes. In addition, this paper will brieflyRead MoreEssay on Time Value Of Money1655 Words   |  7 PagesTime Value of Money Time Value of Money To make itself as valuable as possible to stock holders; an enterprise must choose the best combination of decisions on investment, financing and dividends. In any economy in which firms have the time preference, the time value of money is an important concept. Stockholders will pay more for an investment that promises returns over years 1 to 5 than they will pay for an investment that promises identical returns for years 6 through 10. Essentially oneRead MoreTime Value of Money1033 Words   |  5 PagesTime 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,Read MoreCapital Budget Recommendation1135 Words   |  5 Pagesorganization. An overview of each possible technique provide it this paper before explaining how the how the recommendation was made. After considering Guillermo s circumstance, evaluating Guillermo Furniture s data sheet and using the present value index method to compare his alternative capital investment opportunities, a recommendation was ready to be made to Guillermo. It is recommended that Guillermo select the high technology investment solution because of its higher return rate. Read MoreEssay on Time Value Of Money1252 Words   |  6 PagesTime Value of Money The time value of money serves as the foundation of finance. The fact that a dollar today is worth more than a dollar in the future is the basis for investments and business growth. The future value of a dollar is based on the present dollar amount, interest rate and time period involved. Financial calculators and tables can assist in computing the future and present values, which eases the pain of the mathematically challenged. Yield or rate of return can also be calculatedRead MoreThe Relationship Between Time And Money1545 Words   |  7 Pagesbetween time and money provides the foundation of every financial decision that we, the people made in the world today. Whether it will be saving money for a future event or considering a loan to pay for a current financial need. Everyday, everywhere people are greatly affected by the time value of money. Firms and organizations, investors and capitalists use this concept in particular for them to decide what to accomplish with their mo ney and how to achieve their goals. They give money today inRead MoreTime Value Of Money Paper1354 Words   |  6 PagesTime Value of Money Paper In order to understand how to deal with money the important idea to know is the time value of money. Time Value of Money (TVM) is the simple concept that a dollar that someone has now is worth more than the dollar that person will receive in the future, this is because the money that the person holds today is worth more because it can be invested and earn interest (Web Finance, Inc., 2007). The following paper will explain how annuities affect TVM problems and investmentRead MoreTime Value of Money Paper1411 Words   |  6 PagesTime Value of Money Paper In order to understand how to deal with money the important idea to know is the time value of money. Time Value of Money (TVM) is the simple concept that a dollar that someone has now is worth more than the dollar that person will receive in the future, this is because the money that the person holds today is worth more because it can be invested and earn interest (Web Finance, Inc., 2007). The following paper will explain how annuities affect TVM problems and investment

Animal Testing Is It s Bad And Good At The Sametime

The controversy on animal testing is that it s bad and good at the sametime. It s based on protecting humans, not simply producing new life-saving drugs although this is seen as a priority another reason is that animal testing involves the inability of animals to consent to the tests. Humans, it is argued, can make an informed decision to consent while animals have tests forced upon them, with no choice. The controversy started in Abuses of animals during testing were well publicised throughout the 1990s and served to create a public frenzy and anger towards animal testing. The increased attention towards animal testing led up to the ban on animal testing. The most recent animal testing/research was in July 2015 and the rats were being tested on the, rats had needles inserted at an especially powerful acupuncture point known as stomach meridian point. The test was to prove if it might work in the human body to reduce stress and pain, and potentially depression. Do you ever think we are ever doing the right thing? When picking out your medicine or painkillers, do you even stop to see what kind of product you are using? You could be supporting animal cruelty and not even know it. Helpless and defenseless animals are being performed on four different types of experiments all around the world. Most of the things being performed in these labs you could never imagine one human being doing to another. Animals should not be tested on because AnimalShow MoreRelatedManaging Information Technology (7th Edition)239873 Words   |  960 Pagesand permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458. Many of the designations by manufacturers and sellers to distinguish their

Meditation Essay Summary Example For Students

Meditation Essay Summary The Transcendental Meditation technique is a simple, natural, effortless procedure practiced for any amount of time, usually 10-20 minutes in the morning and evening, while sitting comfortably with the eyes closed. During this technique, the individuals awareness settles down and experiences a unique state of restful alertness. As the body becomes deeply relaxed, the mind transcends all mental activity to experience the simplest form of awareness, Transcendental Consciousness, where consciousness is open to itself. This is the self-referral state of consciousness. The experience of Transcendental Consciousness develops the individuals latent creative potential while dissolving accumulated stress and fatigue through the deep rest gained during the practice. This experience enlivens the individuals creativity, dynamism, orderliness, and organizing power, which result in increasing effectiveness and success in daily life. The Transcendental Meditation technique is scientific, requiring neither specific beliefs nor adoption of a particular lifestyle. The practice does not involve any effort or concentration. It is easy to learn and does not require any special ability. People of all ages, educational backgrounds, cultures, and religions in countries throughout the world practice the technique and enjoy its wide range of benefits. Over 500 scientific research studies conducted during the past 25 years at more than 200 independent universities and research institutes in 30 countries have shown that the TM program benefits all areas of an individuals life: mind, body, behavior, and environment. The research findings include:Increased happiness Reduced stress Increased intelligence Increased creativity Improved memory Improved health Reduced high blood pressure Improved relationships Increased energy Reduced insomnia Reversal of biological aging Reduced crime and improved quality of life in society The research has been published in such major scientific journals as Science, the American Journal of Physiology, Scientific American, Lancet, the Journal of Counseling Psychology, the International Journal of Neuroscience, the Journal of the Canadian Medical Association, the British Journal of Educational Psychology, and the Journal of Conflict Resolution. Research indicates that TM technique Meditators on average have the biological age of a person 5 to 12 years younger, as well as significantly reduced incidence of illness and risk of heart disease. Studies also show that TM technique Meditators have warmer interpersonal relationships, less anxiety, increased self-esteem and self-confidence, increased problem-solving ability and greater creativity. The individual spontaneously radiates a purifying and nourishing influence of positivity and harmony in society as a whole. Now I would like to show one of the different ways that you can meditate, if you feel uncomfortable with sitting on the ground for a few minutes than let me know. Close your eyes and breathe normally. Sit with a strait back and a stiff and rigid neck. Focus on the sounds of the waves crashing into the shore. Picture yourself as the water, which is being tossed slowly and smoothly into the shore. Smell the fresh air and feel the cool breeze blow against your face. Now a person of the opposite sex is playing the guitar. Relax and become a part of this song that he or she is playing. Let yourself feel the situation. Sorry to take you out of this Transcendental Consciousness state. This is one of the major benefits of Transcendental Meditation, you allow yourself to feel the situation you are put into. When you meditate on your own you can put yourself into any situation that you wish. That is a major reason why meditation is so easy, relaxing, and benificial.