The writer is very fast, professional and responded to the review request fast also. Thank you.
For your job as the business reporter for a local newspaper, you are given the task of putting together a series of articles that explains the power of the time value of money to your readers. Your editor would like you to address several specific questions in addition to demonstrating for the readership the use of the time value of money techniques by applying them to several problems. What should be your response to the following memorandum from your editor? TO: Business Reporter FROM: Perry While, Editor, Daily Planet RE: Upcoming series on the Importance and Power of the Time Value of Money In your upcoming series on the time value of money, I would like to make sure you cover specific points. In addition, before you begin this assignment, I want to make sure we are all reading from the same script, because accuracy has always been the cornerstone of the Daily Planet. In this regard, I would like responses to the following questions before we proceed: 1. What is the relationship between discounting and compounding? 2. What is the relationship between PVIF i,n and PVIFA i,n? 3. a. What will $5,000 invested for ten years at 8% compounded annually grow to? b. How many years will it take $400 to grow to $1,671, if it is invested at 10% compounded annually? c. At what rate would $1,000 have to be invested to grow to $4,046 in ten years? 4. Calculate the future sum of $1,000, given that it will be held in the bank for 5 years and earn ten percent compounded annually. 5. What is an annuity due and how does it differ from an ordinary annuity? 6. What is the present value of an ordinary annuity of $1,000 per year for 7 years discounted back to the present at 10%. What would be the present value if it were an annuity due? 7. What is the future value of an ordinary annuity of $1,000 per year for seven years, compounded at 10%? What would be the future value if it were an annuity due? 8. What is the present value of a $1,000 perpetuity discounted back to the present at 8% 9. What is the present value of a $1,000 annuity for ten years with the first payment occurring at the end of year 10 (that is, ten $1,000 payments occurring at the end of year 10 through year 19) given a discount rate of 10% 10. Given a 10% discount rate, what is the present value of a perpetuity of $1,000 per year if the first payment does not begin until the end of Year 10. 11. What is the effective annual rate, EAR, for a bank loan compounded quarterly. The loan has an annual APR of 8%.
Question:1. What is the relationship between discounting and compounding?Solution:Compounding:-Convert the interest rate for a compounding period into an effective rate for the whole year by…
Show more
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more