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Managed Money Examples and Analysis

This document contains examples of calculating present and future values of cash flows using time value of money formulas. It provides 5 examples showing calculations of net present value and return on investment using different interest rates and time periods. The examples demonstrate how to use the time value of money concepts to evaluate investment alternatives.

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SUMITFORBIZ
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5 views3 pages

Managed Money Examples and Analysis

This document contains examples of calculating present and future values of cash flows using time value of money formulas. It provides 5 examples showing calculations of net present value and return on investment using different interest rates and time periods. The examples demonstrate how to use the time value of money concepts to evaluate investment alternatives.

Uploaded by

SUMITFORBIZ
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

IST 614: Managing Money

Example 1
40%*5% =100%*x%

x 8
Hence,
1000
Exmaple2 500 PV1 458.9261
PV0 500 PV2 421.226
CF1=FV1 500 PV3 386.624
CF2=FV2 ∑PV 1266.776
CF3=FV3 8.95% 0.0895 PV0 1000
3 266.7761
r
n
3500
Example3 1000 PV1 909.0909
PV0 1000 PV2 826.4463
FV1 1000 PV3 751.3148
FV2 1000 PV4 683.0135
FV3 1000 PV5 620.9213
FV4 ∑PV 3790.787
FV5 10% PV0 3500
5 290.79
r
n

Example4 3000
MODEL 'A' 900 PV1 818.1818
PV0 900 PV2 743.8017
FV1 900 PV3 676.1833
FV2 900 PV4 614.7121
FV3 900 PV5 558.8292
FV4 ∑PV 3411.708
FV5 10% PV0 3000
5 NPV 411.708
R
N
2000
MODEL'B' 610 PV1 554.5455
PV0 610 PV2 504.1322
FV1 610 PV3 458.302
FV2 610 PV4 416.6382
FV3 610 PV5 378.762
FV4 ∑PV 2312.38
FV5 10% 2000
5 NPV 312.38
r So Model 'A' has better NPV. So I choose model A.
n

Example5 2
n 10%
r 15000 PV1 10000
PV0 11000 PV2 10000
FV1 12100 ∑PV 20000
FV2 PV0 15000
NPV 5000
ROI 33.33%

Cost Study 1
Managing Money

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