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Essay / Research Paper Abstract
This 8 page paper looks at 5 questions set by the student concerning the time value of money, including net present value calculations, loan repayment calculations and investment returns. The calculation for each question is shown.
Page Count:
8 pages (~225 words per page)
File: TS14_TETVMcalcs.rtf
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Unformatted sample text from the term paper:
The figure should use all digits between 1 - 9 and have no discernable pattern, for this paper the following student unique number (SUN) is used 458723196 Question 1
Acme is looking at making an investment for a total of ?458,723,196, with an annual inflation rate of 4% (the first digit of the SUN). The cost given is
the current cost, but Acme do not want to make the investment for 14 years, so the calculation has to look at the impact of time on the cost. If
the current cost is known the calculation for assessing the future value needs to take the current value and then increase the cost by 4% each year on a compound
basis. This gives us the following table showing the increase in the cost each year as the annual rate of inflation
is added Value at start of the year Inflation rate Value at the end of the year Year 1 458,723,196 4% 477,072,124 Year 2 477,072,124 4% 496,155,009 Year 3
496,155,009 4% 516,001,209 Year 4 516,001,209 4% 536,641,258 Year 5 536,641,258 4% 558,106,908 Year 6 558,106,908 4% 580,431,184 Year 7 580,431,184 4% 603,648,431 Year 8 603,648,431 4% 627,794,369 Year 9
627,794,369 4% 652,906,143 Year 10 652,906,143 4% 679,022,389 Year 11 679,022,389 4% 706,183,285 Year 12 706,183,285 4% 734,430,616 Year 13 734,430,616 4% 763,807,841 Year 14 763,807,841 4% 794,360,154 This shows
that the cost in 14 years time, if the only influence on price is the inflation rate, will be ?794,360,154. Therefore if the company want to look at undertaking this
project in 14 years time they will need a total of ?794,360,154 at the time of the projects start. Question 2 Acme has decided to establish a sinking
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