The time value of money

    • [DOC File]Chapter 3 Time Value of Money

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      The Time Value of Money. 1.1 Why money has time value? 1.1.1 Money received today is worth more than the same sum received in the future, i.e. it has a time value. 1.1.2 This occurs for three reasons: (a) potential for earning interest (cost of finance) (b) impact of inflation (c) effect of risk. 1.2. Compounding. 1.2.1 EXAMPLE 1. An investment ...

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    • [DOC File]CHAPTER 7: Financial Budgeting - CPA Diary

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      c. the time value of money is ignored. d. such decisions seldom involve cash flows. a 26. Because of idle capacity, a company is considering two assets for sale. They are identical in all respects except that asset A has a higher tax basis than asset B. Only one need be sold now and the market price is …

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    • [DOC File]Time Value of Money

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      Each bond has a current market value of $925 and each share has a market value of $16.75. The bonds mature in 15 years for $1000 and have a coupon rate of 9% per year paid semiannually. The firm’s equity has a beta of 1.2. The return on T-bills is 4.5% and the market risk premium is 8.5%. ... Time Value of Money ...

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    • [DOC File]TIME VALUE OF MONEY - Lehigh University

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      TIME VALUE OF MONEY. Present Value. Present value of a lump sum. Example 1: Find the present value of a $100 cash flow that is to be received 5 years from now if the interest rate equals 10%.

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    • [DOC File]Chapter 5

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      CHAPTER 5. The Time Value of Money. QUESTIONS. 1. What is the relationship between a future value and a present value? A future value equals a present value plus the interest that can be earned by having ownership of the money; it is the amount that the present value will grow to over some stated period of time.

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    • [DOC File]Time Value of Money - University of Connecticut

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      Time Value of Money. ANSWERS TO END-OF-CHAPTER QUESTIONS. 2-1 a. PV (present value) is the value today of a future payment, or stream of payments, discounted at the appropriate rate of interest. PV is also the beginning amount that will grow to some future value. The parameter i is the periodic interest rate that an account pays.

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    • [DOC File]Lecture Notes on Time Value of Money

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      (Note, this is not a time value of money problem, but it solved with a similar calculation. Such adjustments are necessary to overcome “money illusion”] Solution: $100,000 ÷ (1.03)40 =100,000 ÷ 3.26204 = $ 30,655

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    • [DOCX File]Time Value of Money

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      Introduction to Time Value of Money A sum of $100 received today is worth more than $100 received a year from today. The heart of a TVM calculation is the process of expressing the future value of a payment made in the present (compounding) or the present value of …

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    • [DOC File]Time Value of Money

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      TIME VALUE OF MONEY PROBLEMS. Assume an interest rate of 10% for all three problems. An annuity contract will pay $100/year each year from the end of Year 8 to end of Year 21. What is the value of this stream a) today (time 0) and b) 25 years from now. A project requires an outlay of $100,000 today.

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    • [DOC File]Chapter

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      However, money has a time value. An amount of money received today is worth more than the same dollar amount received a year from now. Similarly, a payment of a certain amount is worth less if it is paid a year from now. The main reason for why this is the case …

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