Business Finance
1. ; Why do we say money has time value?
2. ; Why is it important for business managers to be familiar with time value of money concepts?
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3. ; Define Present Value.
4. ; Define Future Value.
5. ; What are present value and future value interest factors? (as in PVIF and FVIF)
6. ; (calculating future value) ; You buy a 6 year, 8% CD for $1,000. ; Interest is compounded annually. ; How much is it worth at maturity?
7. ; (calculating present value) ; What’s the present value of $1,000 to be received in 8 years? ; (Your required rate of return is 7% a year.)
8. ; (calculating the rate of return) ; A friend promises to pay you $600 two years from now if you loan him $500 today. ; What interest rate is your friend offering you?
9. ; (calculating the future value of an annuity) ; If you invest $100 a year for 20 years at 7% annual interest, how much will you have at the end of the 20th year?
10. ; (calculating the present value of an annuity) ; How much would you be willing to pay today for an investment that pays $800 a year at the end of the next 6 years? ; (Your required rate of return is 5% a year.