Atlets Average / 10 2. 2: Time Value of Money Lamp Sums Sing payments are known as lump sums. We can solve for the future value or the present value of a lump suma de bele. Finding the future value (FV) or compoundegy), the process of going from today's values to future amounts the equation FVX - PV(1+" Here, present values werest rate per year, and N-number of period. You can use calculators and spreaches to find future values. Ah of the company proces shows how any sumy ever time at various interest rates. The greater the interest rate, the the growthre. Finding the present value (PV) in called discounting and it is simply the reverse of lorony). In general, the present value of a cash flow do years in the future in the amount which it were on hand today, would grow to equal the given future amount. The equation in Present value = PVP Agruph of the counting process shows how the present value of any sum to be received in the future decreases and approaches as the years to receiptines, and the rest value declines faster Cyte interest rates. The fundamental goal of fancial management is to maximize the female and the value of any is the value of the expected future cash flow One can solve for either the interest rate or the number of periods using the Vand the equations. The easiest way to solve for these variables with a financial calculator or a pracht Quantitative Problem i You deposit $2,400 ton seccount that pay 5% per year. Your plan is to withdraw this amount at the end of 5 years to use for a down payment on a new emos much will you be able to withdraw at the end of years? Do not round intermediate calculations. Round your answer to the nearest cent $ Quantitative Problem Today you investum sum want in an uity fund that provides an 104 annual return you would like to have $11.00 in 6 years to hele with a de payment for hom. How much do you need to deposit today to reach your $11,000 goal? Du retround warmediate clations. Found your answer to the recent 5 Grade it Now Save & Continue Continue without saving 2. 2: Time Value of Money: Lump Sums -Select- payments are known as lump sums. We can solve for the future value or the present value of a lump sum as we discuss below. Finding the future value (FV), or -Select is the process of going from today's values to future amounts. The FV equation is: FVN - PV(1+1)" Here, PV - present value; I - interest rate per year, and N - number of periods. You can use calculators and spreadsheets to find future values. A graph of the Select v process shows how any sum grows over time at various interest rates. The greater the interest rate, the select the growth rate. Finding the present value (PV) is called discounting, and it is simply the reverse of -Select In general, the present value of a cash flow due N years in the future is the amount which, if it were on hand today, would grow to equal the given future amount. The PV equation is: Present value PV- WV. (140" A graph of the discounting process shows how the present value of any sum to be received in the future decreases and approaches -Salect was the years to receipt increases, and the present value declines faster at Select interest rates. The fundamental goal of financial management is to maximize the firm's value, and the value of any asset is the -Select value of its expected future cash flows. One can solve for either the interest rate or the number of periods using the FV and the PV equations. The easiest way to solve for these variables is with a financial calculator or a spreadsheet. Quantitative Problem 1: You deposit $2,400 into an account that pays 5% per year. Your plan is to withdraw this amount at the end of 5 years to use for a down payment on a new car. How much will you be able to withdraw at the end of 5 years? Do not round intermediate calculations. Round your answer to the nearest cent. Ch 05: Blueprint Problems. Time Value of Money Pro SWS TOW any sonyrow Uvere at VOUS CERESETS THERE WERE THESE Uwurde Finding the present value (PV) is called discounting, and it is simply the reverse of Select In general, the present value of a cash flow due N years in the future is the amount which, if it were on hand today, would grow to equal the given future amount. The PV equation is: Present value - PV- (141 A graph of the discounting process shows how the present value of any sum to be received in the future decreases and approaches alect was the years to receipt increases, and the present value declines faster at det interest rates. The fundamental goal of financial management is to maximize the firm's value, and the value of any asset in the Select value of its expected future cash flows. One can solve for either the interest rate or the number of periods using the FV and the PV equations. The easiest way to solve for these variables is with a financial calculator or a spreadsheet. Quantitative Problem 1: You deposit $2,400 into an account that pays 5% per year. Your plan is to withdraw this amount at the end of 5 years to use for a down payment on a new car. How much will you be able to withdraw at the end of 5 years? Do not round intermediate calculations, Round your answer to the nearest cent. $ Quantitative Problem 2: Today, you invest a lump sum amount in an equity fund that provides an 10% annual return. You would like to have $11,800 in 6 years to help with a down payment for a home. How much do you need to deposit today to reach your $11.800 goal? Do not round intermediate calculations. Round your answer to the nearest cent. $