User Account

All Pages

Dollars depending on the interest rate

Assignment Help Finance Basics
Reference no: EM131938530

Question: Is $10,000 today (Option A) better, or $1,000 today and at the beginning of each year for twelve years (Option B)? The answer seems pretty straightforward - $12,000 is better than $10,000.  But TVM takes into account the value of interest earned (or sacrificed) depending when the funds are received. The future $1,000 dollar payments will each be worth slightly less than that in today's dollars depending on the interest rate. There is a breaking point where option A is best, or option B becomes best, depending on the rate. So, what is that rate?

Reference no: EM131938530

Questions Cloud

Discuss in detail your plan of action : Discuss in detail your plan of action and how you will implement your plan of action considering the employees involved and the organization in whole.
Determining the growth potential : Company ABC has just paid a dividend of 35 cents per share. Because of its growth potential, its dividend is forecasted to grow at a rate of 5 percent
What is the effective annual rate of such a loan : What is the effective annual rate of such a loan (recall that an auto loan typically requires monthly payments)? Show your work.
Development of a hypothetical learning trajectory : Develop a hypothetical learning trajectory to support the teaching and learning of a key concept in Number in upper primary mathematics
Dollars depending on the interest rate : The future $1,000 dollar payments will each be worth slightly less than that in today's dollars depending on the interest rate.
Identify the most adopted retention strategies : In your judgement, which one of them is the most important? What are the implications of this in the management of human behavior in the work place.
What is the present value : An investment will pay you $16,000 in 8 years. The appropriate discount rate is 9 percent compounded daily.
What is the future value : What is the future value of $200 in 24 years assuming an interest rate of 13 percent compounded semiannually?
How does reverse logistics affect workloads : How does reverse logistics affect workloads, process design, and other issues?

Reviews

Write a Review

Finance Basics Questions & Answers

  Define-security trading and investment banking services

The board of directors has asked you to look into the possibility of the bank offering limited security trading and investment banking services.

  Show how you can realize a guaranteed profit from covered

suppose that the current spot exchange rate is euro1.50pound and the one-year forward exchange rate is euro1.60pound.

  Associate the sound from the electric

Mary's cat learned to associate the sound from the electric can opener with being fed, so every time Mary used the can opener

  Under what circumstances would the firm maintain

Suppose that a firm wishes to maintain a capital structure that is consistent with an A senior debt rating. Under what circumstances would the firm maintain a lower degree of leverage than a cross section of single-A-rated firms?

  The states require life insurers to disclose

The states require life insurers to disclose certain policy information to applicants for life insurance. Describe the types of information that appear on a typical disclosure statement.

  Prepare a 20x8 consolidated income statement

Assume that Go-med is a joint venture owned by Insure and four other venturers, that the acquisition differentials are valid, and that it has not yet adopted IFRS 11: Joint Arrangements.  Prepare a 20X8 consolidated income statement for Insure using ..

  List any discounts that may be currently in effect in policy

List any discounts that may be currently in effect in the policy. Are there any other additional discounts for which you (or your subject) may be eligible?

  How much should be deposited now at 8 compounded semi

how much should be deposited now at 8 compounded semi annually to make a possible equal withdrawl of 5000 at the end

  Explain how the gold standard worked

Explain how the gold standard worked and why it led to stable exchange rates. What might be some advantages and disadvantages of returning to the gold standard?

  Using a 38 discount rate calculate the net present value

using a 3.8 discount rate calculate the net present value payback profitability index and irr for each of the

  What is the required rate of return on the investor

What is the required rate of return on the investor's portfolio? Please show the complete explanation.

  How would a worldview influence politics

What is a worldview? Why is it important? What are some of the possible worldview's? How would a worldview influence politics?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd