Overview: In Packet #23, we'll be focusing on time value of money concepts. We've been applying time value of money as we've considered notes payable and other situations that required the preparation of amortization schedules. Now, we'll be applying these same concepts in a broader, decision-focused context. Semester case: As he and the other shareholders of Cowboy Ice Cream Company weigh the possibility of expansion, W.T. realizes there are several additional analyses they should be completed before making that decision. He also realizes that a fundamental part of each of these analyseswill be understanding the time value of money. In this packet, we'll be focusing on just that, by considering situations other than those that pertain directly to CIC. As you read, consider both (1) how to apply these techniques and skills and (2) how these would Ultimately enter into a decision such as the one CIC is contemplating. Key questions: 1. What is the difference between a lump sum and an annuity 2. What is the difference between an ordinary annuity and an annuity due What impact does the difference between these have on the time value of money? 3. In your own words, describe how to find the present value of a single sum using time value of money tables. How does this process differ if you wished to find the present value of an annuity I 4. What is the net present value decision rule? Why is this rule appropriate? Key terms. Using your own words, define the following: 1. Capital investments 2. Cost of capital (beyond the definition, note other, interchangeable terms)