Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210...
-
Upload
hoangthien -
Category
Documents
-
view
218 -
download
2
Transcript of Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210...
![Page 1: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/1.jpg)
Before Class starts….(make sure your name is on all submissions)
Last Homework due 12/1(MW) or 12/2(TH) before class.
Help session Sunday 11/23 or 11/30 1:00-3:30pm in GBS130
Final Exam is Saturday December 13 9:00-Noon; Conflicts? Contact me ASAP!
What questions do you have for me?
– TA Office Hours 5-6 T&R in W520 & Accounting Lab Hours on http://bus.emory.edu/scrosso
– File cabinet downstairs contains your mail folder. Your homework and exams returned there.
![Page 2: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/2.jpg)
![Page 3: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/3.jpg)
![Page 4: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/4.jpg)
BUS210
The Time Value of MoneyAppendix A
![Page 5: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/5.jpg)
Key Questions:
Future Value v. Present Value?n= number of periods?r=effective or market interest rate?Single payment or Ordinary annuity (multiple payments)?Interest bearing or Noninterest bearing?
Draw a Timeline:
![Page 6: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/6.jpg)
Future Value of a Single Sum EA-1
If $150 were invested today, how large a sum could be withdrawn at the end of the following time periods?
Compound Interest Rates 5 years 10 years 15 years
5%
10%
15%
![Page 7: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/7.jpg)
Present Value of a Single Sum EA-2
Compute the present value of $10,000 received at the end of the following time periods at the following discount rates.
Compound Interest Rates 5 years 10 years 15 years
5%
10%
15%
![Page 8: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/8.jpg)
Future Value of an Ordinary Annuity EA-3
If $150 were invested at the end of each year over the following time periods, how large a sum could be withdrawn at the end of the final time period?
Compound Interest Rates 5 years 10 years 15 years
5%
10%
15%
![Page 9: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/9.jpg)
Present Value of an Ordinary Annuity EA-5
Compute the present value of $10,000 received at the end of each year over the following time periods at the following discount rates.
Compound Interest Rates 5 years 10 years 15 years
5%
10%
15%
![Page 10: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/10.jpg)
Present Value of different payment patterns EA-7
Compute the present value of the payment patterns provided below, given an 8% discount rate.
a. $50 at the end of year 2, $100 at the end of year 5, and $80 at the end of year 8.
![Page 11: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/11.jpg)
Present Value of different payment patterns EA-7
Compute the present value of the payment patterns provided below, given an 8% discount rate.
b.$100 at the end of years 1,2,3,4; and $100 at the end of year 8.
![Page 12: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/12.jpg)
Present Value of different payment patterns EA-7
Compute the present value of the payment patterns provided below, given an 8% discount rate.
c. $60 at the end of years 5,6,7,8; and $100 at the end of year 10.
![Page 13: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/13.jpg)
Present Value of different payment patterns EA-7
Compute the present value of the payment patterns provided below, given an 8% discount rate.
d. $90 at the end of years 7,8,9.
![Page 14: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/14.jpg)
Highest Present Value EA-11Congrats! You have just won the lottery. The lottery board offers you 3 different options for collecting your winnings:
1. Payments of $500,000 at the end of each year for 20 years.
Assume that all earnings can be invested at 10% annual rate. Which option should you consider and why?
![Page 15: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/15.jpg)
Highest Present Value EA-11
Congrats! You have just won the lottery. The lottery board offers you 3 different options for collecting your winnings:
2. Lump-sum payment of $4,500,000 today.
Assume that all earnings can be invested at 10% annual rate. Which option should you consider and why?
![Page 16: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/16.jpg)
Highest Present Value EA-11
Congrats! You have just won the lottery. The lottery board offers you 3 different options for collecting your winnings:
3. Lump-sum of a $1,000,000 today and payments of $2,100,000 at the end of Years 5, 6, and 7.
Assume that all earnings can be invested at 10% annual rate. Which option should you consider and why?
![Page 17: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/17.jpg)
Future and Present Values EA-9
Ben found $25,000 and decided to invest it. He believes he can earn 10% (compounded annually) on his investment for the first 4 years, 12% for the following 3 years, and 15% for the following 5 years.
a. How much money will Ben have at the end of 4 years, 7 years, and 12 years?
![Page 18: Before Class starts - Emory University 2014/210.11.11.8.30.pdf · Before Class starts ... BUS210 The Time Value of Money Appendix A. Key Questions: ... b. If someone offered to pay](https://reader033.fdocuments.in/reader033/viewer/2022052607/5a70ce267f8b9a9d538c505e/html5/thumbnails/18.jpg)
Future and Present Values EA-9Ben found $25,000 and decided to invest it. He believes he can earn 10% (compounded annually) on his investment for the first 4 years, 12% for the following 3 years, and 15% for the following 5 years.
b. If someone offered to pay him $36,000 at the end of 4 years for the $25,000, should he accept? Why or why not?