What is the difference between simple and compound interest

Reference no: EM133194305

Assignment - Investment Payback Calculation Discussion Questions

Description - Submit written responses to these questions.

Q1. What is the difference between simple interest and compound interest?

Q2. What is the future value of $10,000 with an interest rate of 16 percent and one annual period of compounding? With an annual interest rate of 16 percent and two semiannual periods of compounding? With an annual interest rate of 16 percent and four quarterly periods of compounding?

Q3. What is the relationship between the present value factor and future value factor?

Q4. Compare the results of the present value of a $6,000 ordinary annuity at 10 percent interest for 10 years with the present value of a $6,000 annuity due at 10 percent interest for 11 years. Explain the difference.

Q5. If a nurse deposits $1,000 today in a bank account and the interests is compounded annually at 12 percent, what will be the value of this investment:

Five years from now?

Ten years from now?

Fifteen years from now?

Twenty years from now?

Q6. Comment of the following statement. "When a not-for-profit facility receives a contribution from a member of the community, the cost of capital is inconsequential when deciding how to use this contribution, because it is, in effect, free money."

Q7. What are the primary drawbacks of the payback method as a capital budgeting technique?

Q8. Explain why pro forma income statements adjust for depreciation expense when developing projected cash flows for a project.

Q9. Will a decision that is based upon NPV ever change if it were based upon IRR instead? Why or why not?

Reference no: EM133194305

Questions Cloud

Summarize any current hypotheses that have been proposed : Summarize any current hypotheses that have been proposed to explain the observed distribution. Suggest areas for further epidemiologic research

What responsibilities do companies have regarding justice : What responsibilities do companies have regarding justice and care? Should business ethics be grounded on more concrete tenets? Why or why not?

Cloud-based security issues developers : University of the District of Columbia-There are 7 cloud-based security issues developers must consider when designing for security.

Summary of the environmental justice case : Georgia Southwestern State University - A summary of the details of the environmental justice case. Pay attention to the description, project details

What is the difference between simple and compound interest : What is the relationship between the present value factor and future value factor? What is the difference between simple and compound interest

Develop a plan for further research on comparative research : Evaluate if the data supports or refutes your hypothesis. Develop a plan for further research on your comparative research question.

What effect you think coronavirus will have on relationships : Generally speaking, what effect do you think the coronavirus will have on relationships in general and sexual activities in particular

Thoughts and experience essay : Why is it so important to have firm requirements early in a development project, and what processes have you seen that help manage requirements?

What are ways that prisons recruit qualified people to work : What are some ways that prisons could recruit qualified people to work in corrections?

User Account

All Pages