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bond valuation, capital budgeting, lease analysis, and many other important finan- cial problems. Problem Format To help you und ...
SPREADSHEET SOLUTION Future Value 63 ABCDEFG 1 Interest rate 0.05 2 Time 01234 5 3 Cash flow 100 4 Future value 105.00 110.2 ...
Explain what is meant by the following statement: “A dollar in hand today is worth more than a dollar to be received next year.” ...
alternative to end up with $127.63 after five years. Conversely, if the security cost more than $100, you should not buy it, bec ...
SPREADSHEET SOLUTION 66 CHAPTER 2 Time Value of Money ABCDEFG 1 Interest rate 0.05 2 Time 01234 5 3 Cash flow 0 0 0 0 127.63 4 ...
Solving for Interest Rate and Time 67 relatively low discount rate, the present value of a sum due in the very distant future is ...
NUMERICAL SOLUTION Use Equation 2-1 to solve for i: Therefore, the interest rate is 5 percent. FINANCIAL CALCULATOR SOLUTION ...
Solving for n Suppose you invest $78.35 at an interest rate of 5 percent per year. How long will it take your investment to grow ...
SPEADSHEET SOLUTION 70 CHAPTER 2 Time Value of Money Most spreadsheets have a built-in function to find the number of periods. ...
Future Value of an Annuity 71 Time Line: 05%1 2 3 100 100 100 105 110.25 FVA 3 315.25 Here we show the regular time line as the ...
FINANCIAL CALCULATOR SOLUTION Inputs: 3 5 0 100 Output: 315.25 Note that in annuity problems, the PMT key is used in conjun ...
Again, the time line is shown at the top of the diagram, and the values as calculated with a regular calculator are shown under ...
SPREADSHEET SOLUTION For the annuity due, use the FV function just as for the ordinary annuity except enter 1 for Type to indi ...
The Present Value Interest Factor of an Annuity for i and n, PVIFAi,n,is a short- hand notation for the formula. NUMERICAL SOLU ...
Annuities Due Had the three $100 payments in the preceding example been made at the beginning of each year, the annuity would ha ...
Annuities: Solving for Interest Rate, Number of Periods, or Payment 77 Switch to the beginning-of-period mode, and then enter N ...
interest rate of 2 percent per month or 12(2%) 24% per year, you would probably want to buy the computer rather than lease it. ...
to pay off many smaller issues that had been floated in prior years to pay for the wars. Since the purpose of the bonds was to c ...
80 CHAPTER 2 Time Value of Money We could find the PV of each individual cash flow using the numerical, financial cal- culator, ...
To find the PV of these cash flows withExcel,put the cursor on Cell B4, click the function wizard, click Financial, scroll down ...
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