Pvif table download

Intro to Corporate Finance

700 words

Assume that you would like to purchase a home in the next 5 years. Also assume that you have already saved $50,000 so far and the approximate cost of the house is $250,000. Calculate how much you need to save for the next five years to purchase this home and put down 20% as a downpayment. Using the following website: http://www.proteam-corvette.com/1967.html

Base the interest rate on the five year interest rate from the Treasury department: http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

· Calculate the required yearly savings on $50,000.

· How much money could be made using the same interest rate with the amount of yearly cash flows which would have been saved for the investment if these amounts had been invested instead?

· Which is the best option? Why?

· Phase Resources: don’t forget to site your references when using

 "Discounted Cash Flows Calculator" This calculator finds the fair value of a stock investment the theoretically correct way, as the present value of future earnings.

 Annuities The purpose of this tutorial is to help you better identify, understand, and calculate future and present values of both ordinary annuities and annuities due. The tutorial assumes that you have a basic understanding of the time value of money, but might still need a little extra help with annuities.

 Annuity Information Basics on understanding how annuities work.

 Investopedia Present Value Calculator Provides a tool for calculating present value of future cash flows.

 The Present and Future Value of an Annuity Definitions and step-by-step calculations for Present and Future Value.

 Time Value of Money This site describes the concept of the Time Value of Money (TVM) with a concrete example

 Time Value of Money This article explains formulas and concepts of various investment planning topics including compound interest, present value, bond yields, annuity, and stock valuation.

 Time Value of Money Study This overview covers an introduction to simple interest and compound interest, illustrates the use of time value of money tables, shows a matrix approach to solving time value of money problems and introduces the concepts of intrayear compounding, annuities due, and perpetuities. A simple introduction to working time value of money problems on a financial calculator is included as well as additional resources to help understand time value of money, including an Excel worksheet.

 Understanding the Time Value of Money This is an online tutorial for understanding the time value of money.

Activity: Time Value of Money (TVM)

The concept of the time value of money refers to the idea that a dollar received today is worth more than a dollar received in the future. A dollar can be invested to earn interest. Even without inflation, the dollar is worth more today than it will be in the future because of the ability to use the money for investment purposes. Economists would call this an opportunity cost. We are deferring our consumption today so that we will have a greater amount in the future. The time value of money gives us the tools to compare dollars in different time periods. For example, we can compare the future value of the dollars to be received in terms of an equivalent amount of dollars today. Another way to view interest cost is simply the rent for the use of the money.

Suppose you wanted to start investing your money and was asked by a borrower to consider investing with him or her without offering interest. If you do not recognize this offer as a bad investment, you will by the end of this activity.

Most investments pay back the principle at the end of the time period plus interest. The interest amount is a percentage of the principal amount.

What is Interest?

To explain, let's use an example. Suppose you had a 10% interest on a $100 investment, which is equal to 10% of 100. To determine your investment return at the end of the period, follow these steps:

Step 1: Calculate Total Interest