##### Time Value of Money: Single Cash Flows, assignment help

Question description

Looking for some serious help in Financial Management assignment. I needed honest and willing to meet my dead

line. Instruction as following questions

using grammatically correct language and appropriate APA citations. All questions need to be answer and with

APA citations. All material MUST come from the book only. (The book that used is Finance

by Cornett, Adair, & Nofsinger, 2016). Chapter 4 Time Value of Money 1:

Analyzing Single Case Flows Page 78-99, and Chapter 5 Time Value of

Money 2: Analyzing Annuity Flows, pages

100-127. There are some hints and suggestions for certain questions in this

assignment.

Answer the following questions and complete the following problems,

as applicable. Unless otherwise directed, assume annual compounding periods in

computational problems. You may solve

the following problems algebraically, or you may use a financial calculator or

Excel spreadsheet. If you choose to solve the problems algebraically, be sure

to show your computations. If you use a financial calculator, show your input

values. If you use an Excel spreadsheet, show your input values and formulas.

Note: In addition to your solution to each computational problem, you

must show the supporting work leading to your solution to receive credit for

your answer.

Question 1:

Proficient-level: “List and describe the purpose of each

part of a time line with an initial cash inflow and a future cash outflow.

Which cash flows should be negative and which positive?” (Cornett, Adair,

and Nofsinger, 2016, p. 95).

Distinguished-level: State the reason for showing both a

negative and positive amount on the time line.

Question 2:

Proficient-level: “How are the present value and future

value related?” (Cornett, Adair, & Nofsinger, 2016, p. 95).

Distinguished-level: Explain why a dollar is worth more today

than a dollar received a year from now.

Question 3:

Proficient-level: “How are present values affected by

changes in interest rates?” (Cornett, Adair, & Nofsinger, 2016, p.

95).

Distinguished-level: Explain how future values are

affected by changes in interest rates.

Question 4: HINT – In this problem you are asked to calculate

future values using three different interest rates. When asked to recalculate

the problem using a 6% interest rate, here are some check point figures:

Present value = 150; Interest rate = 6%; period of time = 11; and solving for

Future Value (FV) you should obtain the correct answer of 284.74. (REMINDER:

YOU ARE ALSO REQUIRED TO SHOW AND IDENTIFY THE KNOWN VARIABLES IN ORDER TO

OBTAIN THIS CORRECT (FV); i.e., identify the amount of Present Value

(PV), Interest Rate (I), and the Number of periods (N) used in order to solve

for FV = 284.74 in this, and in all, quantitative problems.) So, how you would

show your response to this part of question 4 (regardless of whether you used

an algebraic formula, a financial calculator, or an Excel worksheet) would be

as follows: “Answer is FV = 284.74; using PV =150; I = 6%; and N = 11.

Proficient-level: “How much would be in your savings

account in 11 years after depositing $150 today, if the bank pays 7 percent per

year?” (Cornett, Adair, & Nofsinger, 2016).

Recalculate the savings account balance, using a 6 percent

interest rate, and again, using an 8 percent interest rate.

Distinguished-level: Describe the relationship between changes

in interest rates and the ensuing changes in future values.

Question 5: HINT-The correct response for this problem falls

between the range of $419.50 and $429.99. REMINDER, YOU ARE REQUIRED TO SHOW

AND IDENTIFY THE KNOWN VARIABLES IN ORDER TO OBTAIN THE THIRD YEAR FUTURE VALUE

AMOUNT.

Proficient-level: “A deposit of $350 earns the following

interest rates: (a) 8 percent in the first year, (b) 6 percent in the second

year, and (c) 5.5 percent in the third year. What would be the third year

future value?” (Cornett, Adair, & Nofsinger, 2016).

Distinguished-level: Explain why the future value is not

calculated as the average of the annual interest rates.

Question 6: HINTIn this problem you are asked to calculate

present values using three different interest rates. When asked to recalculate

the problem using an 11% discount (interest) rate, here are some check point

figures: Future value = 850; Interest rate = 11%; period of time = 10; and

solving for Present Value (PV) you should obtain the correct answer of 299.36.

(REMINDER: YOU ARE ALSO REQUIRED TO SHOW AND IDENTIFY THE KNOWN VARIABLES IN

ORDER TO OBTAIN THIS CORRECT PRESENT VALUE (PV) IN THIS, AND IN ALL,

QUANTITATIVE PROBLEMS.) So, how you would show your response to this part of

question 6 (regardless of whether you used an algebraic formula, a financial

calculator, or an Excel worksheet) would be as follows: “Answer is: PV =

299.36; using FV =850; I = 11%; and N = 10.”

Proficient-level: “Compute the present value of a $850

payment made in 10 years when the discount rate is 12 percent” (Cornett,

Adair, & Nofsinger, 2016, p. 96).

Recalculate the present value, using an 11-percent discount

rate, and again, using a 13-percent discount rate.

Distinguished-level: Describe the relationship between changes

in interest rates and the ensuing changes in present values.

Question 7: HINT -In this problem you are asked to calculate

the annual rate of return (I) using three different periods of time. When asked

to recalculate the problem using a 4 year period of time, here are some check

point figures: Present value = (-)5,000; Future value = 9,500; period of time =

4; and solving for the annual rate of return (I) you should obtain the correct

answer of 17.41%. MAKE SURE YOUR SHOW YOUR ANNUAL RATE OF RETURN TO FOUR

DECIMAL PLACES as is shown in the 17.41% response. (Reminder: you are also required

to identify the known variables in order to obtain this Interest rate (I) in

this and in all quantitative problems.) So, how you would show your response to

this part of question 7 (regardless of whether you used an algebraic formula, a

financial calculator, or an Excel worksheet) would be as follows: “Answer

is I = 17.41%; using PV = (-)5,000; FV =9,500; and N = 4.”

Proficient-level: “What annual rate of return is earned on

a $5,000 investment when it grows to $9,500 in five years?” (Cornett,

Adair, & Nofsinger, 2016, p. 97).

Recalculate the rate of return, assuming the growth occurred in

four years, and again, assuming the growth occurred in six years.

Distinguished-level: Describe the relationship between changes

in the amount of time and the changes in annual rate of return.

Question 8:

Proficient-level: Would you rather have a savings account that

paid interest compounded on a monthly basis, or one that compounded interest on

an annual basis? Why?

Distinguished-level: State why a borrower would prefer more, or

less, frequent compounding periods.

Question 9:

Proficient-level: What is an amortization schedule, and what are

some of its uses?

Distinguished-level: Explain why more interest is incurred at

the beginning of the amortization period than at the end of the amortization

period.

Question10:

Proficient-level: “The interest on your home mortgage is

tax deductible. Why are the early years of the mortgage more helpful in

reducing taxes than in the later years?” (Cornett, Adair, & Nofsinger,

2016, p. 123).

Distinguished-level: Explain why the tax benefit of interest is

even larger for longer-term loans?

Question 11: HINT In this problem you are asked to

calculate future values of an annuity payment using three different interest

rates. When asked to recalculate the problem using an 8% interest rate, here

are some check point figures: Payment = 900; Interest rate = 8%; period

of time = 5; and solving for Future Value (FV) you should obtain the correct

answer of 5,279.94. (REMINDER: YOU ARE ALSO REQUIRED TO SHOW AND IDENTIFY THE

KNOWN VARIABLES IN ORDER TO OBTAIN THIS CORRECT (FV); i.e., show and

identify the Payment (PMT), Interest Rate (I), and the Number of periods (N)

used in order to solve for FV = 5,279.94 in this, and in all, quantitative

problems.) So, how you would show your response to this part of question 5

(regardless of whether you used an algebraic formula, a financial calculator,

or an Excel worksheet) would be as follows: “Answer is FV = 5,279.94;

using Payment =900; I = 8%; and N =5.”

Proficient-level: What is the difference between an ordinary

annuity and an annuity due?

Distinguished-level: Explain why the future value of an annuity

due is greater than the future value of an ordinary annuity.

Question 12: HINT-In this problem you are asked to

calculate present value of an annuity payment using three different interest

rates. When asked to recalculate the problem using a 9% discount (interest)

rate, here are some check point figures: Payment = 700; Interest rate = 9%;

period of time = 6; and solving for Present Value (PV) you should obtain the

correct answer of 3,140.14. (REMINDER: YOU ARE ALSO REQUIRED TO IDENTIFY THE

KNOWN VARIABLES IN ORDER TO OBTAIN THIS CORRECT PRESENT VALUE (PV) IN THIS, AND

IN ALL, QUANTITATIVE PROBLEMS.) So, how you would show your response to this

part of question 6 (regardless of whether you used an algebraic formula, a financial

calculator, or an Excel worksheet) would be as follows: “Answer is PV =

3,140.14; using Payment =700; I = 9%; and N =6.”

Proficient-level: “What is the future value of a $900

annuity payment over five years if interest rates are 9 percent?”

(Cornett, Adair, & Nofsinger, 2016).

Recalculate the future value at 8 percent interest, and again,

at 10 percent interest.

Distinguished-level: Describe the relationship between changes

in interest rates and the ensuing changes in future values.

Question 13:

Proficient-level: “What is the present value of a $700

annuity payment over six years if interest rates are 10 percent?”

(Cornett, Adair, & Nofsinger, 2016, p. 123).

Recalculate the present value at 9 percent interest, and again,

at 11 percent interest

Question14: Chapter 4 in the M: Finance textbook by

Cornett, Adair, and Nofsinger provides an introduction to the main concepts of

the time value of money for a single cash flow amount. These concepts are

important in finance, because cash flows analyzed in most of finance occur at

various periods of time, and adjustments to the cash flow’s value need to be

recognized. Review Chapter 4, with particular emphasis on the “Organizing

Cash Flows” and “Future Values” sections of this chapter.Answer the following questions:Would you prefer to have $100 today or $100 one year from now?

Why?How can compounding build wealth over time?How can compounding increase debt over time?Based on your responses to Questions 2 and 3, how can

compounding both build wealth and increase debt? Is compounding a power or a

curseAll

questions/problems from the assignments can be responded to directly from the

assignment page. Be advised on some questions/problems there are references

citing our “M: Finance” text by Cornett, Adair and Nofsinger text when an

assignment uses a question/problem that has been used from the text. However,

since some of the questions/problems have been modified, you do NOT need (and

should not) go to the text to review the question/problem. Simply respond to

all questions/problems directly from the listing on the assignment page.