Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN: 9780357033609
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Question
Chapter 4, Problem 9FPE
Summary Introduction
To discuss: Some short-term investments that are used to manage cash resources.
A liquid investment is any investment that can be effectively changed over into money without significantly affecting its worth.
Summary Introduction
To discuss: The factors that are focused when inflation is concerned.
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Rational investors prefer to receive money today rather than the same amount of money in the future. Why is the consideration of time is important in financial decision making, how can time value be adjusted?
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. Rational investors prefer to receive money today rather than the same amount of money in the future. Why is the consideration of time is important in financial decision making, how can time value be adjusted. Explain in Detail.
Chapter 4 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
Ch. 4 - Prob. 1LOCh. 4 - Describe todays financial services marketplace,...Ch. 4 - Prob. 3LOCh. 4 - Prob. 4LOCh. 4 - Prob. 5LOCh. 4 - Develop a cash management strategy that...Ch. 4 - Adapting to a low-interest-rate environment. A...Ch. 4 - Prob. 2FPECh. 4 - Choosing a new bank. Youre getting married and...Ch. 4 - Prob. 4FPE
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- Suppose you know that an investment will earna positive return in the future. Why is it important to know the present value of the investment?arrow_forwardThe payback method measures: The profitability of an investment. The net cash inflow from an investment. The economic life of an investment. How rapidly the investment is recovered. The investment’s true rate of return.arrow_forwarda) Explain the time value of money principle.b) Identify the underlying assumption of the time value of money principle.c) Suggest how you can minimise the amount of cash you must invest in order to reach your retirement goal.arrow_forward
- 3. Present value Finding a present value is the reverse of finding a future value. Which of the following is true about finding the present value of cash flows? Finding the present value of cash flows tells you how much you need to invest today so that it grows to a given future amount at a specified rate of return. Finding the present value of cash flows tells you what a cash flow will be worth in future years at a specified rate of return. Which of the following investments that pay will $18,500 in 8 years will have a higher price today? The security that earns an interest rate of 8.50%. The security that earns an interest rate of 12.75%. Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 13.80%. Assuming that both investments have equal risk and Eric’s investment time horizon is flexible, which of the following investment options will…arrow_forward2. Future value The principal of the time value of money is probably the single most important concept in financial management. One of the most frequently encountered applications involves the calculation of a future value. The process for converting present values into future values is called . This process requires knowledge of the values of three of four time-value-of-money variables. Which of the following is not one of these variables? The interest rate (I) that could be earned by deposited funds The trend between the present and future values of an investment The duration of the deposit (N) The present value (PV) of the amount deposited All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest earned during the deposit or investment period. Each line on the following graph corresponds to an interest rate: 0%, 9%, or 17%. Identify the interest rate that corresponds…arrow_forwardA financial analyst is treating a cash flow stream as a perpetuity. The present value of the perpetuity will __________ (increase, decrease, or not change) if the interest rate increases, and will ___________ (increase, decrease, or not change) if the growth rate increases.arrow_forward
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