Provide an example of an asset and determine either it’s present or future value. For example,...

Provide an example of an asset and determine either it’s present or future value.

For example, one type of asset is cash. If I have $1,000 today this is it’s present value. If I purchase a certificate of deposit from my bank for one year at an interest rate of 10% compounded annually. It’s future value would be $1,100.

You can give examples of Bonds (present value at a current yield) or

Stocks (present value using the Constant Growth Model) or the present value of future cash flows at a specific interest rate.

Provide an example and explain.

Expert Solution

jeff jeffy answered 2 months ago

Determine the future value and the present value of the following single amounts: Future and Present...

Determine the future value and the present value of the following single amounts: Future and Present Values item Invested Amount Interest Rate Percentage No. of Periods 1 15,000.00 6 12 2 20,000.00 8 10 3 30,000.00 12 20 4 50,000.00 4 12

For each example, calculate the present value, or net present value, of the future amount(s) to...

For each example, calculate the present value, or net present value, of the future amount(s) to support your answer and show your work using either factors (pp. 219 & 221 in the text), an Excel spreadsheet with the Excel PV or NPV functions or the equations, such as PV = FV / (1+Interest Rate)Time. Suppose you have a project where you will invest $20,000 today and receive one payment $26,200 exactly 5 years in the future. If your opportunity cost...

1. The future value of a present sum increases as either the discount rate or the...

1. The future value of a present sum increases as either the discount rate or the number of periods per year increases, other things held constant. True False 2. It is always desirable to have a higher compounding frequency, regardless of the initial investment or the time horizon. True False 3. The present value of a future sum increases as the term (N) increases, regardless of compounding frequency. True False 4. A perpetuity is a level stream of evenly spaced...

Determining the present value of bonds payable Interest rates determine the present value of future amounts

Question: Determining the present value of bonds payable Interest rates determine the present value of future amounts. (Round to the nearest dollar.) Requirements 1. Determine the present value of 10-year bonds payable with face value of $86,000 and stated interest rate of 14%, paid semiannually. The market rate of interest is 14% at issuance. 2. Same bonds payable as in Requirement 1, but the market interest rate is 16%. 3. Same bonds payable as in Requirement 1, but the...

Question 2. What is difference between Present Value and the future value of an asset? What...

Question 2. What is difference between Present Value and the future value of an asset? What is meant by the opportunity cost of an item or activity? Give an example. What is the maximum amount you would pay for an asset that generates an income of $ 5,000 at the end of each of the two years when the opportunity cost of using funds is 10 percent?

PRESENT VALUE OF AN ANNUITY - (a) What is the present value of an asset that...

PRESENT VALUE OF AN ANNUITY - (a) What is the present value of an asset that pays $10,000 per year at the end of the next four years if the appropriate discount rate is 5 percent? What total return would you earn if you bought this asset and it paid its expected cash flows on time each year for the next four years? Prove that you earned the same return that you would have, had you put your money in...

Present Value & Future Value calculation

Calculate the required values and select the correct option.

Provide the Present Value of the gradient, and then determine the value Ruby must set aside.

Ruby Rose will be in graduate school for the next three years. She borrowed some money from the bank for her graduate education, which the bank has accepted to be paid after Ruby graduates from school in two years.The bank has accepted to the following payment plan: from the beginning of Year 4 (37th month) to end of year 5 (60th month), pay $600 in month 37 and increase payment by 4% every month thereafter.How much money should Ruby Rose...

(a)Determine the present value of the expected future cash flowassuming: (1) There is no hedge. 1815...

(a)Determine the present value of the expected future cash flowassuming: (1) There is no hedge. 1815 Gallons * BRL 90.15 = 163,622 Exchange Rate = 0.4234 Covert to USD = $69,277.55 Interest Rate of USD = 0.0215 Present Value In USD =. $67,819.44 (2) The company hedges using a forward contract 1815 Gallons * BRL 90.15 = 163,622 Exchange Rate = 0.4227 Convert to USD = $69,163.02 Interest Rate of USD = 0.0215 Present Value in USD = $67,707.31...

When you calculate the present value of an asset, for example a bond, you are calculating...

When you calculate the present value of an asset, for example a bond, you are calculating _____. maximum price you would pay for the asset minimumm price you would pay for the asset future value of the asset insurance premiums

Question