TVM – Single and Annuity Cash Flow
Answer questions and perform calculations related to single and annuity cash flows. I have attached the excel sheets.
Introduction
In this assessment, you will examine why a dollar received today is worth more than the dollar received tomorrow, learn the difference between compounding and discounting, and learn about annuities and amortization of loans. In other words, you will explore time value of money (TVM), which is the foundation of finance that deals with the mathematics behind the valuation of financial instruments such as stocks, bonds, and mortgages.
It is necessary to be able to apply the knowledge you have gained by classifying market transactions and financial instruments and by describing how financial markets work.
Preparation
TVM is the foundation of mathematical finance that can be applied to corporate as well as personal finances. The TVM concept can be applied to single and multiple cash flows. However, in real life, you often come across financial applications that require multiple or annuity cash flows. In this assessment, you will apply the TVM concept to single and annuity cash flows. Before beginning the assessment and reviewing the examples provided in the assessment template, study Chapter 7, “Time Value of Money I: Single Payment Value,” and Chapter 8, “Time Value of Money II: Equal Multiple Payments,” from the Principles of Finance text. One must understand the TVM theory before being able to solve the TVM problems.
Instructions
Complete and submit the Assessment 2 Template [XLSX] Download Assessment 2 Template [XLSX].
Competencies Measured
By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria:
Competency 1: Analyze financial environments and concepts.
Explain the correct compounded interest choice.
Analyze a mortgage repayment strategy.
Competency 2: Apply financial computations and processes.
Complete five single cash flow calculations correctly.
Complete five annuity cash flow computations correctly.
Competency 3: Communicate effectively and professionally.
Convey clear meaning through appropriate word choice and usage.
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