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If the firm's cost of capital is 12 percent, what is the present value of the net investment at time 0?
What is the future value of an initial $100 after 3 years if it is invested in an account paying 10 percent annual interest?
Compute the annual interest rate or rate of return that you will earn on the following investments:
Find the future value of the following investments, the interest rate is 8 percent per year:
If the Khandker's total capital amounts to $22 million and its book value per share is $20, what is the firm's earnings per share?
If the firm's cost of capital is 14 percent, what is the project's IRR? (Hint: Is the firm's cost of capital relevant to an IRR calculation? )
Find the amount to which $500 invested today will grow to in five years under each of the following conditions:
How much should you contribute each year in order to meet the expected cost of your children's education?
Net income for the year was $800,000. Calculate the Earnings Per Share (EPS).
If you can earn 12 percent, how much will you have to save each year if you want to retire in 35 years with $1 million?
Provides annual gasoline savings of $1,200, how long must she own the car before the savings justify its cost? Assume an 8% cost of capital.
What is present value? What is future value? Would you rather have one dollar today or two dollars a year from now? Why?
Explain why debtors benefit during periods of high inflation. For example, why would someone in Argentina want to have debt?
Your uncle has given you three alternatives for your inheritance. You can have $5,000 now; $1,000 per year for the next eight years; or $12,000 at the end.
Interest on the trust fund is compounded annually at an 8 percent interest rate. How much is in the trust fund today?
You need $28,974 at the end of 10 years, and your only investment outlet is an 8 percent long-term certificate of deposit (compounded annually).
Identify at least one financial application of TVM employed by each of the following businesses:
He expects the card to increase in value 12 percent per year for the next 10 years. How much will his card be worth after 10 years?
What is the present value of $100,000 received in 15 years if the current opportunity rate of return is 9% annually?
Suppose you inherited $200,000 and invested it at 6% per year. How much could you withdraw at the beginning of each of the next 15 years?
How is a home mortgage an example of TVM? How can you show that more interest is paid at the beginning of a loan period than at the end?
A home buyer signed a 20-year, 8% mortgage for $72,500. Given the following information, how much should the annual loan payments be?
Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for next 15 yrs and expects to earn a 8% annual rate of return
What is the present value of this 20 year cash flow. Use a 11% discount rate.
In 12 years I will sell my home and pay off the mortgage. What is the principal balance on the loan?