Give a verbal definition of the term present value and illustrate it using a cash flow timeline

Question:

Give a verbal definition of the term present value and illustrate it using a cash flow timeline with data from an example that you construct. As a part of your answer, explain why present values are dependent on interest rates.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Principles of Finance

ISBN: 978-1285429649

6th edition

Authors: Scott Besley, Eugene F. Brigham

See More Books

Question Posted: Nov 24, 2014 08:53 AM

See More Questions

Give a verbal definition of risk thats consistent with the way we use the word in everyday life. Discuss the weaknesses of that definition for financial theory.
Provide a brief definition of the term middleware. In one or two paragraphs, explain why middleware can be difficult to write and test.
Write a one-sentence definition of the term "genotype." Do the same for "phenotype." Does the phenotype of an organism automatically change when a change in genotype occurs? Why or why not? Can...
A contractor has the opportunity to choose between building a house or doing two extension works in the next 6 months. If you build the house and sell it, you can make $25,000. However, if the...
Compute the area enclosed by the traverse of Problem 10.19 using the DMD method. Check by coordinates.
Explain the process by which a mortgage-backed security is created. What roles do Ginnie Mae, Fannie Mae, and Freddie Mac play?
5. During its fiscal year ended June 30, 2016, the City of Ingalls issued purchase orders totaling $5,000,000, which were properly charged to encumbrances at that time. Ingalls received goods and...
In 2007, Peggy, a widow, places $3 million in trust, life estate to her children, remainder to her grandchildren, but retains the right to revoke the trust. In 2011, when the trust is worth $3.1...
Business Background Assume that you established Green Thumb Gardening Services (a fictional business) on 1 May 2023 in Sydney. The company provides quality gardening services including lawn care,...
For a recent year, Microsoft Corporation (MSFT) reported short-term unearned revenue of $34,102 million. For the same year, Microsoft also reported total revenues of $89,950 million. a. Assuming that...
The Niendorf Corporation produces tea kettles, which it sells for $15 each. Fixed costs are $700,000 for output up to 400,000 units. Variable costs amount to $10 per kettle. a. What is the firms gain...
When financial institutions, such as banks or credit unions, advertise the rates on their loans, they often report the APR. If you wanted to compare the interest rates on loans from different...
Consider the example on page 435, which shows that there is no need for deswizzling if hardware swizzling is used. Explain why, in that example, it is safe to change the short identifier of page...
Question 2 of 6 When can XWFs approve expenses on behalf of Google? If a Director has approved it. If your employer has approved it. XWFs cannot approve expenses on behalf of Google. If it's under...
Does the following table represent a valid discrete probability distribution? x 1 2 3 4 5 P ( X = x ) 0.11 0.06 0.25 0.41 0.51
Semester Two Practice Examinations, 2022 Question 1. [10 marks] Suppose X and Y have the joint probability mass function x 0 1 2 0 CO 0.175 0.105 1 0.18 0.075 C1 where CO and C are real numbers such...
Problem 7 (40 pts) Ethylene glycol (p=1096 Kg/m, C=2505 J/KgK, v=6.9x10-6 m/s, Pr=73.5) is pumped through a pipeline of diameter D=0.4 m that runs across a lake L=200 m wide. The bulk velocity and...
The number of fully formed apples on 100 plants was counted with the following results: 2 plants had 0 apples 5 plants had 1 apple 7 plants had 2 apples 11 plants had 3 apples 18 plants had 4 apples...
What are the various micro and macro political risks that MNEs have to assess before deciding to invest in a foreign country?
Discrete sample spaces: suppose there are N cable cars in San Francisco, numbered sequentially from 1 to N. You see a cable car at random; it is numbered 203. You wish to estimate N. (See Goodman,...
Draw a cash flow diagram depicting the net cash flows associated with the purchase, operation, and disposition of a synthetic rubber-blending machine. The cash flow components are shown below. Your...
Donna can invest today in a fund that will guarantee her a 5% return compounded annually for five years. She can invest $1,200 today, $1,400 one year from now, $1,800 two years from now, and $2,100...
When using Excels built-in Future Value function, why does Dr. Konners enter dollar amounts as negative numbers?
Assume you win a lottery, and you are offered the following stream of payments by the lottery commission: $25,000 today, $32,000 one year from now, another $32,000 two years from now, and a final...
Fig 1. Rolling a 4 on a D4 A four sided die (D4), shaped like a pyramid (or tetrahedron), has 4 flat surfaces opposite four corner points. A number (1, 2, 3, or 4) appears close to the edge of each...
I just need help with question #4 please! Thank you! Windsor Manufacturing uses MRP to schedule its production. Below is the Bill of Material (BOM) for Product A. The quantity needed of the part...
(25) Suppose that we have an economy consisting of two farmers, Cornelius and Wheaton, who unsurprisingly farm corn c and wheat w, respectively. Assume that both farmers produce their crop of choice...

Give a verbal definition of the term present value and illustrate it using a cash flow timeline

Question:

Step by Step Answer:

To find the present value of an amount to be received in the future we must take out the int...View the full answer

Principles of Finance

Students also viewed these Corporate Finance questions