AC Project 4 Calculations**

.xlsx

School

University of Maryland Global Campus (UMGC) *

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Course

630

Subject

Finance

Date

Apr 3, 2024

Type

xlsx

Pages

16

Uploaded by ayindecole97

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Instructions Answer all questions in this workbook. Be sure to read the introductory text on tabs 1 and 3 as well as these instructions. Keep in mind that the focus of this project is corporate finance . The information generated by the accounting system is important; but in finance, decisions are driven by an analysis of cash flows rather than profits. Tab 1 contains a series of exercises on the concept of the time value of money. These exercises do not relate directly to the issues facing LGI. Tab 2 focuses on the concept of annuities . The first few questions do not pertain specifically to LGI; the latter questions do. Tab 3 pertains to whether LGI should acquire new assets that may enhance the company's productivity and thus improve financial performance.
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1. Briefly explain the meaning of the term "present value" in your own words. Present value refers to the current value at the present moment. 2. Briefly explain the meaning of the term "future value" in your own words. Future value signifies the value that is expected to exist at a later point in time. 3. What is the future value in five years of $1,500 invested at an interest rate of 4.95%? PV $1,500 NPER 5 years $1,909.87 RATE 4.95% 4. What is the future value of a single payment with the following characteristics? PV $950 NPER 6 years RATE 5.4% $1,302.47 5. What is the present value of $65,000 in six years, if the relevant interest rate is 8.1%? NPER 6 years RATE 8.10% $40,734.20 FV $65,000 6. What is the present value of a single payment with the following characteristics? Time value of money (TVM) exercises There are five variables in TVM calculations: present value, number of periods, rate of return, regular payments, and future value. If four of the variables are known, then the fifth can be calculated using algebra, a financial calculator, or a computer program such as Excel. Excel functions for the five variables are as follows: PV—present value NPER—number of periods RATE—rate of return PMT—regular payments FV—future value
NPER 11 years RATE 5.05% FV $10,000 $5,816.25 7. The present value of a payment is $4000. The future value of that payment in five years will be $48 PV $4,000 NPER 5 years 3.71% FV $4,800 8. What is the annual rate of return of a single payment with the following characteristics? PV $1,000 NPER 15 years FV $10,000 16.59%
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800. What is the annual rate of return?
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