Question

In: Finance

You have applied for a job. As part of its evaluation process, you must take an...

You have applied for a job. As part of its evaluation process, you must take an examination of the time value of money analysis covering the following questions. Please show your work including each step by using your calculator OR Excel. (Identify N, I/Y, PV, PMT, and FV)

A) What’s the future value of $200 after 3 years if it earns 8%, annual compounding?

B) What’s the present value of $200 to be received in 3 years if the interest rate is 8%, annual compounding?

C) What annual interest rate would cause $1,000 to grow to $2,000 in 2 years?

D) What is the present value of a 6-year, $100 ordinary annuity if the annual interest rate is 4%?

Solutions

Expert Solution

a.Information provided:

Present value= $200

Time= 3 years

Interest rate= 8%

The question is solved by computing the future value.

Enter the below to calculate the future value:

PV= -200

N= 3

I/Y= 8

Press the CPT key and FV to calculate the future value.

The value obtained is 251.94.

Therefore, the future value is $251.94.

b.Information provided:

Future value= $200

Time= 3 years

Interest rate= 8%

Enter the below in a financial calculator to compute the present value:

FV= 200

N= 3

I/Y= 8

Press the CPT key and PV to calculate the present value.

The value obtained is 158.77.

Therefore, the present value is $158.77.

3.Information provided:

Future value= $2,000

Present value= $1,000

Time= 2 years

The question is solved by computing the yield to maturity.

The yield to maturity is calculated by entering the below in a financial calculator:

FV= 2,000

PV= -1,000

N= 2

                                                                                                                              

Press the CPT key and I/Y to compute the yield to maturity.

The value obtained is 41.42.

Therefore, the interest rate is 41.42%.

d.Information provided:

Future value= $100

Time= 6 years

Interest rate= 4%

Enter the below in a financial calculator to compute the present value:

FV= 100

N= 6

I/Y= 4

Press the CPT key and PV to calculate the present value.

The value obtained is 79.03.

Therefore, the present value is $79.03.

In case of any query, kindly comment on the solution.


Related Solutions

You have applied for a job with Abu Dhabi Commercial Bank. As part of its evaluation...
You have applied for a job with Abu Dhabi Commercial Bank. As part of its evaluation process, you must take an examination of the time value of money analysis covering the following question. Draw timelines for each of the following: An AED 100 lump sum cash flow at the end of year 2                                                  An ordinary annuity of AED 100 per year for 3 years                                                 An uneven cash flow stream of -50, 100, 75 and 50 at the end of years...
Job structure development is dependent on a process of job evaluation. Explain this process.
Job structure development is dependent on a process of job evaluation. Explain this process.
An employee has come to you with a request to take on a part-time job. The...
An employee has come to you with a request to take on a part-time job. The employee would be working for Price Waterhouse as a contract employee during tax season. The employee has assured you that she will not work more than 20 hours a week, primarily on weekends. Price-Waterhouse is one of the five accounting firms that has put a bid in to do the auditing for G-BioSport. Possible Solutions: Allow the accountant to work as long as a...
An employee has come to you with a request to take on a part-time job. The...
An employee has come to you with a request to take on a part-time job. The employee would be working for Price Waterhouse as a contract employee during tax season. The employee has assured you that she will not work more than 20 hours a week, primarily on weekends. Price-Waterhouse is one of the five accounting firms that has put a bid in to do the auditing for G-BioSport. Possible Solutions: Allow the accountant to work as long as a...
An employee has come to you with a request to take on a part-time job. The...
An employee has come to you with a request to take on a part-time job. The employee would be working for Price Waterhouse as a contract employee during tax season. The employee has assured you that she will not work more than 20 hours a week, primarily on weekends. Price-Waterhouse is one of the five accounting firms that has put a bid in to do the auditing for G-BioSport. Be Reasonable: Explore the Options 1. Basic Liberties Choose three options...
a. You will need an informed consent process as part of your program evaluation. How will...
a. You will need an informed consent process as part of your program evaluation. How will you obtain informed consent from your participants? Will you have them sign a form or just verbally agree to participate in the evaluation?
suppose that you have applied for a job vacancy for the biggest poultry firm in a...
suppose that you have applied for a job vacancy for the biggest poultry firm in a country. the interview panel asked you to explain the relevance of the price elasticity of demand for the firm. how do you answer
Assume that you are nearing graduation and have applied for a job with a local bank....
Assume that you are nearing graduation and have applied for a job with a local bank. The bank’s evaluation process requires you to take an examination that covers several financial analysis techniques. Answer the given questions. Answer the given questions. Question 1. What is the present value of the following uneven cash flow stream $50, $100, $75, and -$50 at the end of Years 0 through 3? The appropriate interest rate is 10%, compounded annually. Question 2. Suppose that, on...
You and have applied for and successful won a job as senior policy analyst for the...
You and have applied for and successful won a job as senior policy analyst for the Government of Canada (Privy Council) and you have been well trained to handle all aspects of the job. You will be the “go to person” for the Prime Minister on ways to make the economy run more efficiently and fairly, especially from a social policy perspective. As this is a big job, you have hired a team to help find solutions to the social...
You have just applied for a job contract at LSP Company. This company will pay you...
You have just applied for a job contract at LSP Company. This company will pay you $75 at the end of the first year, $225 at the end of the second year, and $300 at the end of the fourth year. Currently you have a saving account in the bank that pays you a rate of 8% compounded annually. What is the future value of such contract at the end of the fourth year? *
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT