Time Value of Money Paper Essay Example for Free

Time Value of Money Paper Essay INTRODUCTION The concept of Time Value of Money Paper has sprung from the concept of the depreciation in the value of money paper with time. It is the concept of the reduction n the purchasing power of the same quantity of money in a future period. Put another way, it is the theory that a certain quantity of money held today will have a more purchasing power than the same quantity of money in a future period due to the depreciating value of money caused by the interest rate and inflation, There are various financial applications for TVM. In fact, financial calculations, assumptions and business is primarily based on the concept of TVM. Because it is this factor which has to be taken into account during long-term loans, annual borrowings and lending, in order for the business to recover the time costs it incurred for the period. [Ross E. (2006)]    APPLICATION 1 A football club is borrowing $1,000,000 from ABC Bank for the purchase of new training equipment. The entire loan is paid back in 4 semi-annual installments. The interest rate is 10% compounded semi-monthly. We want to investigate the â€Å"value† that this money will hold at the end of two years so that we can devise an appropriate interest rate to recover the â€Å"lost value† as well as get some markup. 1st payment: 250,000 * (1-0.05) = 237,500 2nd payment: 250,000 * (1-0.05)2 = 225,625 3rd payment: 250,000 * (1-0.05)3 = 214,343.8 4th payment: 250,000 * (1-0.05)4 = 203,626.6 Total Value; $881,095.3125 We can see that the flat $1 million paid back is not worth the ‘original† amount due to the changes in â€Å"value with time†. Thus the bank can levy a higher interest rate to recover the money lent as well as some markup. [http://www.executivecaliber.ws/sys-tmpl/timevalueofmoney/] APPLICATION 2 A mother is saving for her daughter’s college education for 10 years from now. She knows that it will costs her $500,000 for her daughters’ entire college expenses. She does not know how much she should save today in order to get $500,000 after 10 years, if the interest rate is 8% compounded annually. Using the formula: FV=PV(1 + r)t FV=500,000 r=0.08 t=10 PV=? Therefore, PV=FV(1+r)-t PV=500,000(1.05)-10 PV=$306956.6 Thus, she has only to deposit $306,956.6 in her account for a period of 10 years compounded annually at 8% to be sure that she will be able to have the amount necessary for her child’s education when required. APPLICATION 3: You want to purchase a new car and you are willing to pay $20,000. If you can invest at 10% compounded annually and you currently can invest $15,000, how long will it take you to generate enough cash to pay for the car?    FV=20,000 PV=15,000 r=0.01 t=? Rearranging the basic formula [FV={PV(1+r)t] t = ;n (FV/PV) / (1+r) t = ln(20,000 / 15,000) / ln(1.1) = 3.02 years So, it will take approximately 3 years for this amount to be able to pay for the car through compounding.    COMPONENTS OF DISCOUNT/INTEREST RATE As we saw in the previous applications that the value of money depreciates as time progresses forwards, financial lenders and institutions are always looking to earn back the exact â€Å"value† of the money that they lent over the period of lending plus a service charge, which will be the actual profit for the lender. Therefore, there are two components in the interest rate: The actual capital recovery factor The profit factor    EXAMPLE A Man borrows $1,000 from a bank. He pays it back in 10 monthly installments.   What interest rate will the bank charge if the bank wants to make a net real 10% profit on the lent amount? The inflation rate is 5%. Payment 1: 100 * (1-0.05/12)1=99.58 Payment 2: 100 * (1-0.05/12)2=99.17 Payment 3: 100 * (1-0.05/12)3=98.76 Payment 4: 100 * (1-0.05/12)4=98.34 Payment 5: 100 * (1-0.05/12)5=97.93 Payment 6: 100 * (1-0.05/12)6=97.53 Payment 7: 100 * (1-0.05/12)7=97.52 Payment 8: 100 * (1-0.05/12)8=96.72 Payment 9: 100 * (1-0.05/12)9=96.31 Payment 10: 100 * (1-0.05/12)10=95.91 Total = $977.37 There is a difference of $22.63 between the lent amount and the value of the recovered amount. To make the â€Å"value† equal, the bank has to adjust the interest rate so that they earn $22.63 more to break-even. Further they have to earn an additional $100 as profit. They need a net $1100. So, the difference is $123.63 which has to be adjusted into the monthly installment to result in the desired figures. Therefore, with an effective interest rate of 13% compounded annually, this amount can be generated sufficiently. There are various methods for determining this interest rate: Implicit Rate Return on Investment Method Weighted Capital Opportunity Cost [Block, Hirt (2005)]                            REFERENCES: Block, Hirt (2005). Foundations of Financial Management (11th ed.) New York: McGraw-Hill.   Chapters 9 and 14.    Ross, E. (2006). Fundamentals of Corporate Finance (6th ed.) New York: Westerfield and Jordan.   Chapter 5. Time Value of Money. Retrieved April 20, 2008, from Leasing and Time Value of Money Web site: http://www.executivecaliber.ws/sys-tmpl/timevalueofmoney/

Heroes and the Journey Home Essays -- Hero Muir Adams Roosevelt Essays

Heroes and the Journey Home A hero is someone who works to change things toward a certain ideal or succeeds in making change, usually to the benefit of many others besides him or herself. Heroes come in just about every form and almost every group or cause has its heroes. One of the definitions for a hero is that they are someone who is "admired for qualities and achievements and is regarded as an ideal or model."(New World Dictionary, 657) There have been many men and women who I consider to be heroes for the National Parks, because they sought change, preservation, appreciation and protection for our National Parks. Most of the heroes that I have focused on used a form of art or a skill to draw people to want to experience the wilderness, and in turn protect it. These heroes for the Parks include John Muir, Ansel Adams, Theodore Roosevelt, and the many boatwomen of the Canyon Country, particularly Georgie White. All of these heroes sought to establish, preserve or improve the parks, for the benefit of the public, so that anyone could experience and understand the love affair with the wilderness that they so loved. They saw these expanses of raw wilderness, and felt that they should be passed on to and enjoyed by everyone for generations to come. They also sought to educate people by using their own forms of expression and influence such as writings and photographs of these natural treasures. Their motivations were not just in the public interest, but also had more selfish goals in mind. All of these people felt it necessary to fight for the protection of the parks because they had formed intimate bonds with the places that they tried to save. Edward Abbey, yet another hero of the parks, expressed it best by calling it the... ...e in some way they all believed that it is important to find a home for your spirit; that place in your mind must exist, and when you find it, it will seem as though heaven has come to Earth. Works Cited 1. Roosevelt, Theodore. "A Speech at the Grand Canyon." New York Sun 7 May 1903 Taken from Filler, Daniel. "Conservation as the Guardian of Democracy". <http://pantheon.cis.yale.edu/~thomast/essays/filler/filler.html> 2. Abbey, Edward. Desert Solitaire: A Season in the Wilderness. New York: Ballantine Books, 1968 3. Teal, Louise. Boatwomen of the Grand Canyon: Breaking into the Current. Tucson: U of Arizona Press, 1994 4. Library of Congress. "Today in History: July 19". <http://memory.loc.gov/ammem/today/jul19.html> 5. Muir, John. Our National Parks. Madison: U of Wisconsin Press, 1981 6. The New World Dictionary 7. Video: John Muir

Cyber Language Research Script

Now I am going to introduce the cyber language which is used by foreigners. English cyber language usually comes from online games, video games and general pop cultural, like movie, youtube video clips, and so on. People usually take the first alphabet of the words in a phrase and combine them into a new word. And these are some of the examples of acronym. They are commonly use all over the world. I think these examples you all may be familiar with, so now I am going to introduce some not so familiar examples. LOL is obviously a example of acronym, which is a short form of laughing out loud.People take each word’s first alphabet to create LOL. And for ‘he’s 404’ means he is clueless. This word includes coinage and ideogram. For coinage, usually when a web page cannot be found, then the internet will pop up a 404 web page to inform you. Therefore when we cannot find someone, we can call him 404. And for ideogram, people instead of saying directly he’s clueless, they refer to the picture of the web site 404, so it is a ideogram. The next one is ASAIK. ASAIK means ‘as soon as I know’. It is also an example of acronym. It is a short form of the phrase as soon as I know.And for the next example, it is easy to know what it means. It means see ya. It includes compounding, because it is combined with 2 words, see and ya. And also the letter C is a homophone of the word see. They both pronounce in the same pronunciation. At the same time, it also includes syllabic writing system and rebus writing system. It is a syllabic writing system, because C represents /si:/ to replsce see /si:/ ,so is syllabic writng At last, it includes rebus writing system, because it uses another word with the same sound to replace it.The word see is replaced by the letter C, and the you is replaced by YA. And at last, this word means night. It includes syllabic writing system, the nine : /nain/ replace nigh /nai/. And it sticks with the letter â⠂¬Ëœt’, which is an alphabetic writing system. Also it is same as CYA, it also includes rebus writing system. The sound nigh is replaced by a word which is similar its sound, nine. Emoticons is a pictographic writing. It use different kinds of punctuation to form a facial expression.This emoticons are usually use in computers, mobile and also other communicating devices and forum. These emoticons can express our feelings even more direct, sometimes it is better than using words to express our feelings. And also these emoticons can help us to save time. For example, if we want to express we are so happy, instead of typing alphabets, we type the punctuations into a smiley face, it would save a lot more time. Type happy, we need to type 5 alphabets, but a smiley face, only needs 2 punctuation, and that’s it.Therefore it really save time form typing words. Because of the efficiency of emoticons, it is now a trend all over the world, and among all the countries, japan is on e of the countries which use emoticons the most. And here are the examples of emoticons. We can see that there are a lot of emoticons to express different kinds emtions. Taiwanese and mainlanders may also miscommunicate throughout a conversation, although they share the same language,Putonghua. The miscommunicate is because of their cultures, each one develop their own kinds of words into their language e. . (1) Taiwanese may use ‘ ‘ to express you are so annoying. But when the mainlanders saw this, they may misunderstand as you are such a motorbike. It would be a totally different ecplanation. And there is also another e. g. (2)mainlanders may use ‘? ‘ to mean being frightened. But in Taiwan, it reminds people that the post in the forum would disclose a play's information. So they use the same word, but the meaning of the word ’? ’ means differently to different culture and nation.

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