...1. Using examples, explain the difference between obscene and indecent materials. Obscene and indecent both have different meanings but are similar in many ways. Obscene material is described as disgusting or repulsive but indecent material is described as being offensive to the public. Both obscene and indecent can be view differently by the public; however, the Constitution plays a role with indecent material. Obscene material "is not protected by the First Amendment,” (The Dynamics of Mass Communication Tenth Edition, page 377) and broadcast stations cannot air obscene material at anytime. The problem with this is that no one had come up with a set standard of what obscene material is. Due to the difference in beliefs between families and individuals, no two people have the same beliefs and will not agree to a set standard of what obscene material really is. Since obscene material is can not be banned completely and therefore can be view during nighttime broadcasting. A good example of this is the adult swim channel. During the day children can view cartoons like Spongebob and Rugrats; but when 10 o’clock p.m. hit, the channel switches to adult swim when there are show with naked women and sex scenes. According to the U.S. Supreme Court, to be obscene, material must meet a three-prong test, "(1) an average person, applying contemporary community standards, must find that the material, as a whole, appeals to the prurient interest (i.e., material having a tendency to excite...
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...12/9/2012 Chapter 9 The Time Value of Money 1 Chapter 9- Learning Objectives Identify various types of cash flow patterns (streams) that are observed in business. Compute (a) the future values and (b) the present values of different cash flow streams, and explain the results. Compute (a) the return (interest rate) on an investment (loan) and (b) how long it takes to reach a financial goal. Explain the difference between the Annual Percentage Rate (APR) and the Effective Annual Rate (EAR), and explain when each is more appropriate to use. Describe an amortized loan, and compute (a) amortized loan payments and (b) the balance (amount owed) on an amortized loan at a specific point during its life. Principles of Finance 5e, 9 The Time Value of Money © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2 1 12/9/2012 Time Value of Money The principles and computations used to revalue cash payoffs at different times so they are stated in dollars of the same time period The most important concept in finance used in nearly every financial decision Business decisions Personal finance decisions Principles of Finance 5e, 9 The Time Value of Money © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 Cash Flow Patterns Lump-sum amount – a single...
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...Time Value of Money Managerial Finance II/FIN476 October 21, 2007 Time Value of Money The Time Value of Money (TVM) serves as a foundation for all other notions in finance. It influences business finance, consumer finance and government finance. Time Value of Money (TVM) results from the concept of interest. Time Value of Money (TVM) is an important concept within the financial management. It compares investment alternatives and then to solve problems, which involving loans, mortgages, leases, savings, and annuities. “In determining the future value, we measure the value of an amount that is allowed to grow at a given interest rate over a period of time” (Block & Hirt 2005). “Why would any rational person defer payment into the future when he or she could have the same amount of money now? For most of us, taking the money in the present is just plain instinctual. So at the most basic level, the time value of money demonstrates that, all things being equal, it is better to have money now rather than later” (Croome 2003). The concept of Time Value of Money (TVM) is that the dollar that company has today is worth more than the promise or expectation that the company will receive a dollar in the future. Money, which a company holds today, is worth more because the company can then invest it and earn interest. Therefore, a company should receive some compensation for foregoing spending. For instance, a company can invest their dollar for one year at...
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...Annuities, Sinking Funds, and Amortization Math Analysis and Discrete Math – Sections 5.3 and 5.4 I. Warm-Up Problem Previously, we have computed the future value of an investment when a fixed amount of money is deposited in an account that pays interest compounded periodically. Often, however, people do not deposit money and then sit back and watch it grow. Rather, money is invested in small amounts at periodic intervals. Consider these problems: 1. Chrissy deposits $200 each year into a savings account that has an annual interest rate of 8% compounded annually. How much money will Chrissy have in her account after three years? Hint: Make up a table of how much she has in her account by year. 2. Ben saves $50 per month in a credit union that has an annual interest rate of 6% compounded monthly. How much money will Ben have in his account after he has made six deposits? Page 1 of 7 II. Generalization Let's generalize the situation. Suppose we deposit P dollars each payment period for n payment periods at rate of interest i per payment period. a. Consider the first deposit only. During how many payment periods does interest get applied to this investment? ____________ Using the compound interest formula, how much is this part of the investment worth? Call this quantity A1. __________________________ b. Consider the second deposit only. During how many payment periods does interest get applied to this investment? ____________ Using the compound interest formula, how much is...
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...Chapter 06 Discounted Cash Flow Valuation Multiple Choice Questions 1. An ordinary annuity is best defined by which one of the following? A. increasing payments paid for a definitive period of time B. increasing payments paid forever C. equal payments paid at regular intervals over a stated time period D. equal payments paid at regular intervals of time on an ongoing basis E. unequal payments that occur at set intervals for a limited period of time 2. Which one of the following accurately defines a perpetuity? A. a limited number of equal payments paid in even time increments B. payments of equal amounts that are paid irregularly but indefinitely C. varying amounts that are paid at even intervals forever D. unending equal payments paid at equal time intervals E. unending equal payments paid at either equal or unequal time intervals 3. Which one of the following terms is used to identify a British perpetuity? A. ordinary annuity B. amortized cash flow C. annuity due D. discounted loan E. consol 4. The interest rate that is quoted by a lender is referred to as which one of the following? A. stated interest rate B. compound rate C. effective annual rate D. simple rate E. common rate 5. A monthly interest rate expressed as an annual rate would be an example of which one of the following rates? A. stated rate B. discounted annual rate C. effective annual rate D. periodic monthly rate E. consolidated monthly rate 6. What...
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...CHAPTER 2: THE TIME VALUE OF MONEY This chapter consists of five sections: the first section explains the time value of money and the factors that affect the time value of money; The second part will help to distinguish the types of cash flow; The next two sections will discuss how to determine the present value and the future value of cash flows; The final section will guide on how to plan an amortized loan. Before we start, we need to clarify a problem together, which is why we have to study the chapter; in other words, why financial managers must understand the time value of money? In fact, whether they are individuals or companies, most financial decisions are associated with the time value of money. Besides, the objective of financial management is to maximize shareholder value and shareholder value depends greatly on the timing of cash flow. Therefore, financial managers need to understand the time value of money to assess the flow of funds, especially in the evaluation of the ability of the investment project to generate extra value for shareholders in the future. In short, you cannot become a financial manager if you do not understand the time value of money. We will start with the question: would you like to get a million dollars today or ten years from now? The contents of this chapter will help you to get a thorough answer to this question. 1 / The time value of money and the factors that affect the time value of money: Simply put, the time value of money is the idea...
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...Axia Material Time Value of Money Resource: Ch. 12, 12-A, & 12-C of Health Care Finance Part I: Complete the following table by inserting your responses to the questions. Cite any sources you use. |Define the time value of money. |As the worth of money which is received after some specific period can not be equal to the worth of money | | |today, therefore the time value of money concept is used to determine the present value of future cash flows | | |or to find future value of present cash flows at a specified rate. | |Provide a real-world example for the time |Bunny will receive $8,500 per year for the next 15 years from her trust. If a 7% interest rate is applied, | |value of money. |what is the current value of the future payments | | |Present value of annuity formula = PMT x (1-(1/1+r^n)/r) | | |Present value of annuity = 8500 *1-1/1.07^15/.07 = 8500*9.108 = 77417 | |Why is time such an important factor in |If you receive cash today and if it is received in future, it has different values. The 100000 received | |financial matters...
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...Time Value of Money Terminology Terminology (AKA jargon) can be a major impediment to understanding the concepts of finance. Fortunately, the vocabulary of time value of money concepts is pretty straightforward. Here are the basic definitions that you will need to understand to get started (calculator key abbreviations are in parentheses where appropriate): Banker's Year A banker's year is 12 months, each of which contains 30 days. Therefore, there are 360 (not 365) days in a banker's year. This is a convention that goes back to the days when "calculator" and "computer" were job descriptions instead of electronic devices. Using 360 days for a year made calculations easier to do. This convention is still used today in some calculations such as the Bank Discount Rate that is used for discount (money market) securities. Compound Interest This refers to the situation where, in future periods, interest is earned not only on the original principal amount, but also on the previously earned interest. This is a very powerful concept that means money can grow at an exponential rate. Compounding Frequency This refers to how often interest is credited to the account. Once interest is credited it becomes, in effect, principal. Note that the compounding frequency and the frequency of cash flows are not always the same. In that case, the interest rate is typically adjusted to an effective rate that is of the same periodicity as the cash flows. For example, if we have quarterly cash flows...
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...G. L. Bradley, Calculus, Brief 10ed. McGraw-Hill, Boston, 2010. Assoc. Prof. Nguyen Dinh Dr. Nguyen Ngoc Hai CALCULUS 2 (BA) Assoc. Prof. Nguyen Dinh Dr. Nguyen Ngoc Hai CALCULUS 2 (BA) Chapter 1 . Mathematics of Finance Contents 1. Compound Interest 2. Continuous Money Flow: Total money flow, present value, accumulated amount of money, continuous deposits. 3. Annuities 4. Amortizations and Sinking Funds Assoc. Prof. Nguyen Dinh Dr. Nguyen Ngoc Hai CALCULUS 2 (BA) Simple and compound interest • If you borrow money you have to pay interest on it. If you invest money in a deposit account you expect to earn interest on it. Interest can be interpreted as money paid for the use of money. • The original amount borrowed or invested is called the principal, denoted by P. Assoc. Prof. Nguyen Dinh Dr. Nguyen Ngoc Hai CALCULUS 2 (BA) Simple and compound interest The rate of interest r is the amount charged for the use of the principal for a given length of time, usually on a yearly (or per annum, abbreviated p.a.) basis, given either as a percentage (p per cent) or as a decimal r , i.e. r= p . 100 The total amount received after (investing) a period of time is called accumulated value. The accumulated value after t year is A(t). Assoc. Prof. Nguyen Dinh Dr. Nguyen Ngoc Hai CALCULUS 2 (BA) Simple and compound interest Simple interest. Simple interest is interest computed on the principal for the entire period it is borrowed (or invested)...
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...MODULE 1 CASE STUDY FIN 501- THE TIME VALUE OF MONEY AND FINANCIAL STATEMENT ANALYSIS DR. JOHN HALSTEAD April 21, 2015 In this case study, I will work through a variety of time value money problems to grasp the concept of how to calculate the present and future value of a lump sum and the present and future value of an annuity. I will also learn how to calculate the present value of a perpetuity. This is important, because this enables me to learn how to determine the value of a typical corporate bond. Present Value of a lump sum, is the value of an expected income stream determined as of the date of valuation. The present value is always less than or equal to the future value because money has interest-earning potential, a characteristic referred to as the time value of money 1. a. PV=$100,000*11.0520=$94,911.41 If you were to receive $100,000.00 in 5 time periods from now, that $100,000 would be worth only $94,911.41 today. If you were to invest the $94,911.41 at a rate of .05% today then you would have $100,000 at the end of 5 time periods. So, if I had a choice between taking an amount higher than the $94,911.41 today as oppose to taking the $100,000 at the end of 5 time periods then I would take the money today. By doing so, I would be able to invest the higher amount at .05% for 5 equal time periods, which would end up being more that the 100,000. b. PV=$200,000*[1/(1.10)10]=$179,274.47 If you were to receive $200,000.00 in 10 time periods from now, that $200,000...
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...Part 2 Valuation 3 The Time Value of Money Contents n n n Objectives After studying Chapter 3, you should be able to: n The Interest Rate Simple Interest Compound Interest Single Amounts • Annuities • Mixed Flows Understand what is meant by “the time value of money.” Understand the relationship between present and future value. Describe how the interest rate can be used to adjust the value of cash flows – both forward and backward – to a single point in time. Calculate both the future and present value of: (a) an amount invested today; (b) a stream of equal cash flows (an annuity); and (c) a stream of mixed cash flows. Distinguish between an “ordinary annuity” and an “annuity due.” Use interest factor tables and understand how they provide a shortcut to calculating present and future values. Use interest factor tables to find an unknown interest rate or growth rate when the number of time periods and future and present values are known. Build an “amortization schedule” for an installment-style loan. n n Compounding More Than Once a Year Semiannual and Other Compounding Periods • Continuous Compounding • Effective Annual Interest Rate n n n Amortizing a Loan Summary Table of Key Compound Interest Formulas Summary Questions Self-Correction Problems Problems Solutions to Self-Correction Problems Selected References n n n n n n n n n n n 39 Part 2 Valuation The chief value of money lies in the fact that one lives in a world...
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...Sport Coupe. The financial decision making was based on which of the vehicles would have the better future value. The purpose of selecting one of the vehicles was to preserve the capital used in buying the car in a way that it would not depreciate after three years. Using two important financial analysis tools, it is interesting to discover that each car presents a different future valuation. The decision to purchase the BMW 335i was made based on the results from the mathematical calculation of Net Present Value (NPV) and Internal Rate of Return (IRR). The procedures used to arrive at this conclusion are laid out step by step. Although some assumptions are made before the final conclusion, this financial analysis assumes the nature of real-time estimation of any investment which future yields matter a lot. Introduction One of the methods to preserve the value of capital is by investing it in a particular project....
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...through 3? The appropriate interest rate is 10%, compounded annually. In order to calculate the present value of uneven cash fellow, I would like to identify what is the present value for uneven cash flow means? Although the return or the payment of these cash flow is usually regular, the amounts in most cases is different from period to other period .when we need to determine the present value of certain asst, we cannot use the standard formula, Because using the standard formula assumes that the payment is equal in each period and this now a nurture of the cash flow. The present value of an annuity formula assumes equal cash flows at each time period. However, sometimes cash flows are not even. Learn how to use a formula to calculate the present value of uneven future cash flows. An annuity is an asset that will pay equal amounts of money at regular time periods over its life. Essentially, an annuity can be thought of as a security with equal expected cash flows usually paid annually, semi-annually, quarterly, or monthly. The payment of dividends or payments from a lawsuit settlement are typical annuities. However, expected future cash flows from a security with the uncertainty of market and economic conditions rarely follow such a regular schedule. (Garger &Patsalides, 2010). Now after we exposed to different opinion to uneven present cash flows, we will start solving the problem which was given in Homework. We will use this equation to determine the present...
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...Chapter 02 How to Calculate Present Values Multiple Choice Questions 1. The present value of $100 expected in two years from today at a discount rate of 6% is: A. $116.64 B. $108.00 C. $100.00 D. $89.00 2. Present Value is defined as: A. Future cash flows discounted to the present at an appropriate discount rate B. Inverse of future cash flows C. Present cash flow compounded into the future D. None of the above 3. If the interest rate is 12%, what is the 2-year discount factor? A. 0.7972 B. 0.8929 C. 1.2544 D. None of the above 4. If the present value of the cash flow X is $240, and the present value cash flow Y $160, then the present value of the combined cash flow is: A. $240 B. $160 C. $80 D. $400 5. The rate of return is also called: I) discount rate; II) hurdle rate; III) opportunity cost of capital A. I only B. I and II only C. I, II, and III D. None of the given ones 6. Present value of $121,000 expected to be received one year from today at an interest rate (discount rate) of 10% per year is: A. $121,000 B. $100,000 C. $110,000 D. None of the above 7. One year discount factor at a discount rate of 25% per year is: A. 1.25 B. 1.0 C. 0.8 D. None of the above 8. The one-year discount factor at an interest rate of 100% per year is: A. 1.5 B. 0.5 C. 0.25 D. None of the above 9. Present Value of $100,000 that is, expected, to be received at the end of one year at a discount rate of 25% per year is: A. $80,000 B. $125,000 C. $100...
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...rates of return affect the decisions? Explain you answer. Present value and future value measures the value at a specific period of time. Present value represents the value of an investment at the beginning of the investment period. For example, what the worth is currently would represent what the value would be today. Future value represents the value of an investment at the end of the investment period. For example, what the worth is in the future would represent what the value would be in specific amount of time. These values each provide techniques in preparing a financial retirement plan. The future value technique of a series of deposits consists of determining future values of regular deposit amount multiplied by the future value of retirement equals the future value amount of regular retirement deposits. For example, the amount of current savings will increase based on a certain interest rate and time period that is also referred to compounding. The present value technique of a series of deposits consists of determining a regular amount to be withdrawn multiplied by the present value of retirement equals present value amount. For example, the current value for a future amount is based on certain interest rate and time period that is also referred to as discounting. The rate of return is the amount of money earned based on the amount of money invested to track all different types of investments. The average rate for short term investments and compound rate for long term investments...
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