Time Value of Money and Present Value Essay Example

Time Value of Money and Present Value Paper Date: 14/11/2012 52. Annuities: You are saving for the college education of your two children. They are two years apart in age; one will begin college 15 years from today and the other will begin 17 years from today. You estimate your children’s college expenses to be $23,000 per year per child, payable at the beginning of each school year. The annual interest rate is 5. 5 percent. How much money must you deposit in account each year to fund your children’s education? Your deposits begin one year from today. You will make your last deposit when your oldest child enters college. Assume four years of college Solution: Cost of 1 year at university = 23,000 N=4 I=5. 5% PMT=23,000 CPT PV = 80,618. 45 For the first child the PV = 80,618. 45/ (1. 055) ^14 = $38,097. 81 For the second child the PV = 80,618. 45/ (1. 055) ^16 = $34,229. 07 Therefore the total cost today of your children’s college expense will be the addition of the 2 = $72,326. 88 This is the present value of my annual savings, which are an annuity, so to get the amount I am supposed to save each year would be: PV=72,326. 88 N=15 I=5. 5 CPT PMT = 7,205. 6 57. Calculating Annuity Values: Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $25,000 per month for 20 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $350,000. Third, after he passes on at the end of the 20 years of withdrawals, he would like to leave an inheritance of $750,000 to his nephew Frodo. He can afford to save $2,100 per month for the next 10 years. If he can earn an 11 percent EAR before he retires and an 8 percent EAR after he retires, how much will he have to save each month in years 11 through 30? Solution: We will write a custom essay sample on Time Value of Money and Present Value specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Time Value of Money and Present Value specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Time Value of Money and Present Value specifically for you FOR ONLY $16.38 $13.9/page Hire Writer First we get the FV of the 2,100 savings over 10 years Bilbo Baggins can afford to save $2,100 dollars per month for the next 10 years therefore at 10 years he would have saved: PMT = 2,100 I = 10. 48 / 12 = 0. 873 N = 10 x 12 = 120 CPT FV = $442,201. 15 So after 10 years he would be able to purchase his yacht at the price of $350,000, and he would be left with a balance of $92,201. 15 This $92,201. 15 will be our current PV at year 10. At year 30, the year when Bilbo retires, the $92,201. 15 would become 92,201. 15*(1. 11) ^20 = $620,283. 23 Second we have to find out how much the inheritance of 750,000 would be at year 30: 750,000/1. 8^20= $160,911. 16 Third In order for him to be able to withdraw a sum of 25,000 per month for the next 20 years after his retirement, we should now calculate this annuity’s present value: N= 20 x 12 = 240 I= 7. 72 / 12 = 0. 643 PMT= 25,000 CPT PV = $3,052,135. 26 Adding up the PV’s of the $750,000 and the annuity, we will get $3,213,046. 32 We will subtract the future value at year 30 of the $92,201. 15 ($620,283. 23) which we saved at year 10 from $3,213,046. 32 to get $2,592,763. 09 We are now left with an annuity that pays $2,592,763. 09 at year 30, and a time period of 20 years (yr11-30) To calculate the yearly PMT, we have FV= $2,592,763. 09 I= 10. 48 / 12 = 0. 873 N= 20 x 12 = 240 CPT PMT = 3,207. 33 Therefore the monthly PMT Bilbo would have to save each month through years 11-30 would be = $3,207. 33 34. Valuing bonds: Mallory Corporation has two different bonds, currently outstanding. Bond M has a face value of $20,000 and matures in twenty years. The bond makes no payments for the first six years, then pays $1,200 every 6 months over the subsequent eight years, and finally pays $1,500 every 6 months over the last years. Bond N also has a face value of $20,000 and a maturity of 20 years; it makes n coupon payments over the life of the bond. If the required return on both these bonds is 10% compounded semiannually, what is the current price of bond M? Of bond N? Solution: The price of a bond is equal to PV of expected future cash flows Bond M: Face value 20,000 Present value of 20,000 = 20,000/ (1. 05) ^40 = $2,840. 91 First we need to get the present value of the annuity for the 1,500 semiannual PMTs at year 14 Present Value of Annuity = $13,295 $13,295 becomes $3,391 at year 0 We then get the annuity of the 1,200 semiannual PMTs at year 6, and then at Present Value $13,005 at year 6 with a PV of $7,242 at year 0 The sum of the 3 PV’s gives us the value of the bond ,841 + 3,391 + 7,242 = $13,474 Bond N Face value 20,000 Present value of 20,000 = 20,000/ (1. 05) ^40 = $2,840. 91 38. Non-constant growth: Storico Co. just paid a dividend of aud 3. 5 per share. The company will increase its dividend by 20% next year, and will then reduce its dividend growth rate by 5% per year, until it reaches the industry average o f 5% industry average growth, after which the company will keep a constant growth rate forever. If the required return on Storico stock is 13%, what will a share of stock sell for today? Solution  : D0 = $3. 5 D1= 3. 5*1. 2= $4. 2 D2= 4. 2*1. 15= $4. 3 D3=4. 83*1. 1= $5. 31 D4=5. 31*1. 05= $5. 58 Since the first 4 periods are different we get the PV of each one alone, then as of the 4th year we get the perpetuity of the rest, and sum them up to get the final NPV We now get the PV of each Dividend PV D1 = 4. 2/ (1. 13) = $3. 72 PV D2 = 4. 83/ (1. 13) ^2 = $3. 78 PV D3 = 5. 31/ (1. 13) ^3 = $3. 68 So the PVs of D1+D2+D3 = $11. 18 NPV of perpetuity at constant growth = 5. 58(0. 08) / (1. 13) ^3 = 69. 75 / (1. 13) ^3 = $48. 34 NPV perpetuity + NPV dividends = NPV price of stock today 48. 34 + 11. 18 = $59. 52

Free Essays on Gambiling

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Financial Reporting Assignment Example | Topics and Well Written Essays - 750 words

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Service Learning Project Paper Essay Example | Topics and Well Written Essays - 750 words

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Divine Power and Divine Retribution in Jose Saramago’s Blindness Essay Example for Free

Divine Power and Divine Retribution in Jose Saramago’s Blindness Essay Divine Power and Divine Retribution in Jose Saramago’s Blindness Introduction   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Often, writers in literature pilfer from the world of reality in their quest to present compelling characters and gripping plots. Nonetheless, others replicate the real world in an abstract sense to sensitize or communicate the malicious and malignant threats, epidemics and plagues prevalent in the world. Such episodes of these phenomena inflict mass threats and destructions, nefarious villains as well as innocent victims who apparel and enthrall novelists. In some instances, divine retribution follows the nefarious villains as well as grapples the ignorant innocent victims. This is well presented by Jose Saramago in his epic novel, Blindness. This paper explores divine power as well as divine retribution in the book Blindness by Jose Saramago arguing that divinity intervention follows in instituting justice. Besides, divinity intervenes to punish ignorance.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Indeed, the novel does not state explicitly that the onus of the swiftly hitting epidemic is resultant from the hands of a divine power such as God. However, the author does not resist writing on a divine power, God. This is because Jose Saramago introduces and trails the action of the churches in supplementing the government’s effort to contain the situation. Moreover, there are multiple references to church leaders all observable in the novel. Besides, Jose Saramago’s presentation in the novel suggests that divine retribution followed a nefariously villainous person. He or she was inflicted or struck with blindness. Additionally, it is interesting to note that literal authors cannot write a masterful work in a spiritual, religious or cultural vacuum. Deductively, it is evident that Saramago alludes to divine intervention and divine retribution.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Interestingly, the Blindness novel depicts a thrilling plot with an incessantly straying narrator from presentation of dialogues and facts to reflection on moral academic and ethical analysis at great lengths. Divine intervention and retribution features at the onset of the story in the first page. It is here that the author dexterously delineates in detail the expected features at an ordinary road intersection. These include flickering of lights and pedestrians crossing the road. Everything is a routine, and the events unfold as usual. However, a car at the intersection does not move or give way to the traffic behind, in spite of the flickering green light, creating an unusual situation.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The author is innate to this situation and goes on to consider rational motives behind the car’s stillness. He states, â€Å"there have to be some mechanical flaws, a loose accelerator, a stuck gear level, suspension problems† (1-2) and many other listings of things that could have gone wary. This situation does not go unnoticed because a bystander comes to the attention of the driver. He opens the door catching the attention of the driver as well as the reader. It then dawns to the reader that the driver was struck with blindness. This is rather bellowing and discomforting. It is not incidental that blindness just hit the driver cum blind. The cause of the blindness can only be explained in terms of divine retribution or intervention.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Saramago twists and turns the novel literally betwixt calamities. The â€Å"Good Samaritan† that came to the aid of the blind man later emerges that he is a thief. On driving the old man home, he steals his car. It is rather ironical that the good natured helper turns to be an immodest, insensitive and hands down thief. Indeed, it is immoral for an able person to take advantage of a handicapped person and exploit them taking advantage of their helplessness. The reader is appareled by the thief and only wishes for divine punishment. Therefore, the thief’s catching of blindness comes as a sigh of relief to the reader for what he or she considers as an immoral and ungracious act.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The scene of people being struck with blindness becomes an incessant phenomenon in the following pages. The narrator trails the lives of victims, and it emerges that they all had crossed paths one way or another. It is here that the narrator philosophizes divine retribution and intervention as calamity strikes the nation ravaging and resulting to outbursts among people with â€Å"I’m blind, I’m blind† uproars. In a series of skits between philosophical argument and conventional wisdom, the narrator presents a vivid account of the actions and motives of the escort and the car thief. Finally, blindness strikes these characters long before the narrator can conclude on the cause of the plague. Interestingly blindness strikes immediately without any bouts to announce its arrival. Divine retribution causes a fierily spread of the plague without a scientific explanation or physical symptoms. Blindness strikes swiftly, strange ly and impartially. For instance, the doctor realizes that he too is blind while watching television. The plague replicates in nature and strangeness to ancient floods and plagues that were acts of divine retribution such as in the bible.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   A clout to divine retribution is protracted from the doctor’s wife. She is the only victim of blindness who separates human flaws and godly affairs thereby attributing the epidemic to divinity. According to her, â€Å"this is unbearable filth of the soul of a human. Of the human body† (279). According to the narrator, â€Å"she said, as if to correct this metaphysical thought, then she added, it is all the same† (Saramago 279). The reader is left the quarry of the thoughts of divine power and retribution. Arguably though, why does divine power not punish the malicious and nefarious villains, as well? Thomas Talbott in his article, â€Å"Punishment, Forgiveness and Divine Judgment† argues that retributivist punishment theory. He justifids punishment by questioning if the punishment befits the error or crime committed. Therefore, punishment is not a rehabilitation or crime deterrence tool but a justice and equalit y feature (Talbott, 154).   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Just like other narrations, the Blindness narrator is obsessed with the behavior of people when put under extreme conditions. It is interesting to see the huge and expansive wary and panic among people following the blindness plague. Indeed, such a mega scale panic and social disarray contends the prevalence of a divine power with much stronger abilities than man can think. Different institutions in the society fall and crumble thanks to the plague for fear of the plague. The military cannot contain the massively and swiftly spreading plague create a heat of battle and confusion amidst the crisis. The government is also initiated into the crisis. It imposes a quarantine effort to control the contagion unsuccessfully resulting to collapse of the media, military and businesses.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Divinity fabling is also evident in the identity of the characters in the novel. For instance, the author does not give them real names but rather opts to identify them in generic form. For instance, there is the blind man, the Good Samaritan cum the car thief, the doctor, the doctor’s wife among many others. The book begins with the first blind man trailing him as his eyesight elopes while at an intersection, in his car. The first blind man is rescued by the Good Samaritan who takes him home. Later on, the good Samaritan steals his car and eventually loses sight. Indeed, divine retribution strikes and the thief is blinded just like other noble souls. The level of blindness infliction is as a resultant of divinity. It trails people who have crossed paths. For instance, the doctor was struck with blindness. Interestingly, he had attempted to treat the first blind man. People who had sat at the waiting room also got struck with blindn ess.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Saramago presents the proclamations of the churches and the church leaders, as well. They preached the end times claiming that the world was coming to an end. The narrator states, â€Å"they were proclaiming the end of the world†. He adds that they preached, â€Å"redemption through the visions of the seventh days, through penitence, †¦the purity and sanctity of the lymph, the black cat’s blood, the sleep of the shadow, the logic of anthropophagy, the rising of sea, painless castration and mainly divine tattoos..† (Saramago, 298). This presents the existence of divine power that claimed the people. References Cooper, Kate, and Thomas Talbot. Punishment, Forgiveness and Divine Judgment. Retribution, repentance, and reconciliation: papers read at the 2002 Summer Meeting and the 2003 Winter Meeting of the Ecclesiastical History Society. Woodbridge, Suffolk, UK: Published for the Ecclesiastical History Society by the Boydell Press, 2004. 154. Print. Saramago, JoseÃÅ' . Blindness: a novel. New York: Harcourt, 1998. Print. Source document

I Know Why The Caged Bird Sings Essay -- I Know Why The Caged Bird Si

In the autobiography I Know Why the Caged Bird Sings, the main character Marguerite Johnson, is influenced by a preponderance of characters including Bailey Jr. , Momma Henderson, and Mrs. Bertha Flowers. One of the primary influences is her older brother, Bailey Jr.. Momma, or Annie Henderson, the parental grandmother, also plays an important role for Maya. Additionally, Mrs. Flowers, the black aristocrat of Stamps, saves Maya during an especially difficult time. All in all, these three characters act as important role models in the development of Marguerite through her juvenile years. First, Bailey Jr. serves as the most significant role in the protagonist’s young life. In the novel, Maya distinguishably states, â€Å" I would be the major loser if Bailey turned up dead. For he was all I claimed, if not all I had.† Bailey is one year senior to the main character, however, it makes no difference, for they both share many of the same interests, such as reading poems and playing games. When Angelou was eight, she and Bailey moved to St. Louis to live with their mother Vivian, and her mother’s boyfriend Mr. Freeman; soon after, Mr. Freeman sexually molests and rapes the young child; after such a horrid experience, the central character only speaks to Bailey who comforts and supports her. To sum up, Bailey gives much confidence to Marguerite throughout their childhood together. Second, Annie Henderson influences her granddaughter as an all powerful role model. For example, â€Å"Mo... I Know Why The Caged Bird Sings Essay -- I Know Why The Caged Bird Si In the autobiography I Know Why the Caged Bird Sings, the main character Marguerite Johnson, is influenced by a preponderance of characters including Bailey Jr. , Momma Henderson, and Mrs. Bertha Flowers. One of the primary influences is her older brother, Bailey Jr.. Momma, or Annie Henderson, the parental grandmother, also plays an important role for Maya. Additionally, Mrs. Flowers, the black aristocrat of Stamps, saves Maya during an especially difficult time. All in all, these three characters act as important role models in the development of Marguerite through her juvenile years. First, Bailey Jr. serves as the most significant role in the protagonist’s young life. In the novel, Maya distinguishably states, â€Å" I would be the major loser if Bailey turned up dead. For he was all I claimed, if not all I had.† Bailey is one year senior to the main character, however, it makes no difference, for they both share many of the same interests, such as reading poems and playing games. When Angelou was eight, she and Bailey moved to St. Louis to live with their mother Vivian, and her mother’s boyfriend Mr. Freeman; soon after, Mr. Freeman sexually molests and rapes the young child; after such a horrid experience, the central character only speaks to Bailey who comforts and supports her. To sum up, Bailey gives much confidence to Marguerite throughout their childhood together. Second, Annie Henderson influences her granddaughter as an all powerful role model. For example, â€Å"Mo...

Keeping Her Nose in Front Essay

Keeping Her Nose In Front, a cartoon by Bill Leak, Highlights the constant web of lies that spiral with Julia Gillard. Through the exaggeration, symbolism and caricature, the artist attempts to provoke an amused response from readers regarding serious problems. This is encouraged to understand the lies that came from our Prime Minister. The artist represents leadership issues in Australian politics in a humorous manner. He weaves the intertextuality with the story of Pinocchio. Ultimately, readers are positioned to worry about what promise will be broken next in this effective political cartoon. The people that are portrayed in Keeping Her Nose In Front are Julia Gillard and Kevin Rudd both being dressed as Pinocchio. The artist is trying to convey a negative effect on this cartoon saying that everything they promise is just a lie, in the foreground you see Kevin Rudd and Julia Gillard both being dressed as Pinocchio and each frame one of the politicians says something, â€Å"THERE WILL BE NO CARBON TAX, THERE WILL BE NO LEADERSHIP CHALLENGE and THERE WILL BE POKIE REFORMS â€Å"and just like the story of Pinocchio each time he tells a lie his nose will grow and that is what happened in this cartoon. The tone of the picture is serious, talking about the leadership proposition that Julia and Kevin both stated but didn’t keep to their word. Taking a clever approach to this cartoon, the author is mixing caricature and serious issues with Julia and Kevin with the carbon tax and as well as the leadership challenge. Bill Leaks is trying to poke fun of these politics by resembling them to Pinocchio. The Author positions the audience to question what these two powerful people might say and if so will it either have a positive impact or maybe a negative impact to the Australian public. From my personal view, I think that the labour party, (specifically Kevin Rudd and Julia Gillard) need to stop spinning intricate lies Throughout their own party, because this is akin to the type of backstabbing nonsense that happens every day outside of the government, and it should certainly not be happening in the political party that is trying to run the country. By explaining my personal view about this comic, I think it also explains the targets that the author was aiming for. It explains how the labour party are lying even to each other and not only the country. The target of this cartoon is in fact the country, and it is trying to emphasis on the issue that these people are the party that is leading the nation.