Assignment: Discussion-Time Value Of Money
Module Overview:
Fundamental Concepts in Financial Management
Assume that your family is planning to purchase a car. You find the following options on the car dealership lot-equitable in price and of your interest:
• A red, two-seater convertible sports car
• A sport-utility vehicle
• A minivan
To make the buying decision, you must evaluate the available options to ensure that your investment will pay off in the long run. While it may be tempting to purchase the sports car, it may not fulfill the requirement of your family-if there are four members in the family, the sports car would not have sufficient room for all of them. Hence, the sports car is not a choice to consider here. However, further considerations will be required to decide between the sport-utility vehicle and the minivan-the initial price or investment and the future costs (i.e., fuel costs, maintenance costs, and insurance costs).
Similar to this scenario, the managers of a company expend a significant amount of time and effort in determining what projects should be pursued as well as the right financing mix for these projects. This module reviews the tools and techniques that management uses in making important decisions.
Module Readings:
Complete the following readings early in the module:
• Module overview
• From your course textbook, The portable MBA in finance and accounting, 4th, read the following chapters:
o Discounted Cash Flow
o Capital Structure
o Planning Capital Expenditure
• From the Internet:
o Financial sites to review and become familiar with:
- Moneychimp: learn Stock Investing, Index Funds, Valuation Models, and more.
- The Concise Encyclopedia of Economics
- Investopedia - Educating the world about finance
- Calculating the Weighted Average Cost of Capital (WACC)
- miniwebtool.com's CAPM (Capital Asset Pricing Model) Calculator
Module Assignment Overview: In this module's assignment, you will discuss specific situations where the time value of money is applied in personal and professional situations. You will also discuss risk and risk aversion.
Assignment: Discussion-Time Value of Money
Time value of money analysis has many applications-both personally and professionally. The calculations can be performed using Microsoft Excel, factor tables, or a financial calculator to help make informed decisions, such as planning for retirement, loan decisions, and capital projects.
The concept of time value of money helps managers value cash flows and assess risk within the organizations.
In this assignment, you will discuss specific situations where the time value of money is applied in personal and professional situations.
Tasks:
1. Share any professional and personal decisions you made in which the concept of time value of money was utilized and include the following:
o The specific decision for which you used time value of money.
o The manner in which you applied the concept.
o The tools you used to complete the analysis, including the timeline.
o An explanation of how using the concept helped you reach a more accurate decision than if time value of money had not been utilized.
Your response should consist of a minimum of 300 words and demonstrate critical thinking and analysis.
(Inform Me About This Opening Very Important)
1. Download the MS6014_M2A1_workbook.xlsx template, and using the appropriate Excel financial functions, do the following:
o Determine the present value of $75,000 discounted at 6% over 6 years.
o Determine the future value of $100,000 invested today at 4% for 5 years.
o Determine what annual payment will need to be invested if you have $10,000 today and want it to grow to $100,000 over 20 years at 4.5%.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.