# Respond to 3 questions about TMV (Time Value of Money), business and finance homework help

*label*Business Finance

*timer*Asked: Apr 18th, 2017

*account_balance_wallet*$25

### Question Description

** OVERVIEW**:

Respond to three questions and solve three computational problems about time value of money (TMV) as it applies to single cash flow.

Time value of money (TVM) is the foundation of mathematical finance. It is important to be able to demonstrate how the TVM concept can be applied to corporate finance, as well as to personal finances. It addition, knowing how to apply various technical terms used in finance, such as *discount rate*, *present value*, and *future value*, is a useful skill.

** RESOURCES**:

Weaver, S. C., & Weston, J. F. (2001). Finance and accounting for nonfinancial managers. New York, NY: McGraw-Hill.

Sherman, E. H. (2011). Finance and accounting for nonfinancial managers (3rd ed.). New York, NY: American Management Association.

Cornett, M., Adair, Y., & Nofsinger, J. (2014). M: Finance (2nd ed.). New York, NY: McGraw-Hill.

** INSTRUCTIONS**:

Respond to the questions and complete the problems.

Questions:

In a Word document, respond to the following. Number your responses 1–3.

- Explain the concept of cash flow in corporate finance.
- Explain how present value and future values are related.
- Explain how present values are affected by changes in interest rates.

Use references to support your responses as needed. Be sure to cite all references using correct APA style. Your responses should be free of grammar and spelling errors, demonstrating strong written communication skills.

Problems:

- In either a Word document or Excel spreadsheet, complete the following problems.
- You may solve the problems algebraically, or you may use a financial calculator or an 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.
- 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.
- Unless otherwise directed, assume annual compounding periods in the computational problems.

- If you deposited $250 in your savings account today, and the bank pays 4 percent interest per year, how much would you have in your savings account after 9 years?
- Recalculate the account balance using a 6 percent interest rate and a 7 percent interest rate.
- A $450 deposit earns 6 percent interest in the first year, 3 percent interest in the second year, and 7 percent interest in the third year. What is the future value at the end of the third year?
- What is the annual rate of return for an $8,000 investment if in five years it grows to $12,500?
- Assuming the growth occurred in six years and then eight years, recalculate the rate of return for these two scenarios.

### Unformatted Attachment Preview

Purchase answer to see full attachment

## Tutor Answer

PLease find the atatched ..

Answer Question No. 1

a).

Present Value

Number of period

PV

n

r

FV

Interest rate

Future value of deposit

FV (4%)

$355,83

FV (6%)

b).

$422,37

FV (7%)

c).

$459,61

$250

9 Years

4%

?

Answer Question No. 2

PV

n

r1

r2

r3

FV

Present Value

Number of period

1st year Interest rate

2nd year Interest rate

3rd Interest rate

Future value of deposit

FV after 3 years

$450

3

6%

3%

7%

?

$525,70

Answer Question No. 3

PV

n

r

FV

r 5 years

r 6 years

r 8 years

...

*flag*Report DMCA

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors