Discounting fv - Study guides, Class notes & Summaries

FINC 3610 Exam 2 CH.5 Sirmans Questions & Answers Example of assets? - ANS-Property, plant, and equipment, stocks, options, bonds, patents, opportunities, knowledge, reputation, etc. What is an asset in terms of financial analysis? - ANS-a sequence of cash flows What is the value of an asset today? - ANS-a function of the cash flows expected to occur in the future 3 key dimensions of cash flows - ANS-size, timing, and uncertainty Cash flows at different points in time are like different? ...

Concept of TVM (time value of money) correct answers $ today not equal to $ tomorrow Compounding (given PV, calculate FV) vs. Discounting (given FV, calculate PV) correct answers Compounding: The process of going to future value (FV) from present value (PV). Discounting: The process of finding the present value of a cash flow or a series of cash flows; discount-ing is the reverse of compounding Future Value (FV) correct answers The amount to which a cash flow or series of cash flows wil...

CMSA- MATH FOR FINANCE PROFESSIONALS EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED GRADED A++ Simple Interest Interest Payment = Principal x Interest Time Value of Money Concept The value of a dollar today is not the same as the value of a dollar in the future. Opportunity Cost Defer from consuming or investing money now. Inflation You can purchase less in the future with money. Default Risk Someone may default on money they owe you. Future Value Using Simple Interest F...

True or false: An annuity due is the same as an ordinary annuity. - False In an annuity due, the payment occurs at the beginning of the period. In an ordinary annuity, the payment occurs at the end of the period. In a deferred annuity, a two-step process can be used to calculate the present value of the annuity. The first step requires the calculation of the present value of the annuity at the beginning of the annuity period. The second step involves discounting the amount calculated in ste...

Default Risk - Risk that a borrower will not make promised payments Liquidity Risk - Risk of recieving less than fair value for an investment if it must be sold for cash quickly Required Interest Rate on A Security - = Nominal Interest Rate + Default Risk Premium + Liquidity Premium + Maturity Risk Premium Real Risk Free Rate / Nominal Risk Free Rate - - Single period interest rate for a completely riskfree security with no inflation added - Nominal = Real Risk Free Rate + Expected Infla...

Finance 310 Exam | Answered with complete solutions The value in t years of an investment made today at interest rate r is called the _________ of your investment. A: Present value B: Compound value C: Future value D: Simple value A dollar invested today at 8.0 percent interest compounded annually will be worth _________ three years from now. A: $1.08 B: $1.1664 C: $1.2597 FV = $1.00 x (1 + 0.8)^3 A dollar invested today at 8.0 percent simple annual interest will be worth __________three years...

Default Risk - correct answer.Risk that a borrower will not make promised payments Liquidity Risk - correct answer.Risk of recieving less than fair value for an investment if it must be sold for cash quickly Required Interest Rate on A Security - correct answer.= Nominal Interest Rate + Default Risk Premium + Liquidity Premium + Maturity Risk Premium Real Risk Free Rate / Nominal Risk Free Rate - correct answer.- Single period interest rate for a completely risk-free security with no...

Intermediate Accounting Exam 2 Review Questions With Correct Answers True or false: An annuity due is the same as an ordinary annuity. - answerFalse In an annuity due, the payment occurs at the beginning of the period. In an ordinary annuity, the payment occurs at the end of the period. In a deferred annuity, a two-step process can be used to calculate the present value of the annuity. The first step requires the calculation of the present value of the annuity at the beginning of the annu...

Finance All Mcgraw Hill Exam Question With Verified Answers A dollar invested today at 7.5 percent interest compounded annually will be worth _______ one year from now. $1.075 $1.75 $1.0075 - answer$1.075 What is the future value of $100 invested for 4 years at 10% interest? $144.00 $145.54 $140.00 $146.41 - answer$146.41 A dollar invested today at 7.5 percent simple annual interest will be worth _______ one year from now. $1.1556 $1.75 $1.075 - answer$1.075 Assume you have $100...

Intermediate Accounting Exam 2 Review Questions With Correct Answers True or false: An annuity due is the same as an ordinary annuity. - answerFalse In an annuity due, the payment occurs at the beginning of the period. In an ordinary annuity, the payment occurs at the end of the period. In a deferred annuity, a two-step process can be used to calculate the present value of the annuity. The first step requires the calculation of the present value of the annuity at the beginning of the annu...