1. Why is the Time Value of Money (TVM) an essential concept for business decision making? Cite some examples of the types of decisions where TVM concepts are used.

2. Using TVM techniques, calculate the amount of savings you will need to comfortably retire. Be as specific as possible and discuss how you arrived at your conclusion. Justify your rate of return choice.

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Sixta KovacekLv2

29 Sep 2019

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Using TVM techniques, calculate the amount of savings you will need to comfortably retire. Be as specific as possible and discuss how you arrived at your conclusion. Justify your rate of return choice

Have you ever walked into a Wal-Mart or other big box store and been greeted by an older person who probably should have retired a decade ago? We all have at some time or another, and most of us think that when we're that age, we want to be taking vacations and spoiling our grand kids, not handing people shopping carts! Heck, none of us really -want to have to work during retirement. It's okay if you choose to work during retirement so that you have a reason to get up in the morning, but it should be your choice to do so.

Want to get rich? Use the power of compound interest working in your favor. A little bit of money invested well over a long period of time can equate to a lot of money! It's really a simple concept, but so many people fail to make use of the amazing power of compound interest. You can be very wealthy at retirement if you just put a relatively small amount of money away for retirement in a solid investment for a long period of time.

If you're under the age of 30, you can retire with a million dollars by age 65 by putting away a lot less money than you think! You'll need to put it in a solid investment account maybe a 401K- You just have to do the research and find a account at your work.. If you're really young, say age 20, you would only need to deposit very little into a good 401k to be a millionaire upon retirement.

You'll have to go find a savings calculator to figure out how much a month you need to put away to be a millionaire at retirement, but chances are it's a lot less money than you might think. Go to ANY OTHER FINANCIAL CALCULATOR. Please note two important things! 1) You must start as young as possible and 2) the return on your investment (percentage gain each year) makes an incredible difference in how you do. Someone who just puts money in CD's may average a 2% return and it would take much more money. If you get a professional broker or educate yourself, you should be able to get the traditional 7-8% return on your investments that someone using professional can usually get . This is why I always tell people to get the best advice they can through a professional broker as young as they can!

Your discussion is to tell me how much you should start investing now each month to have a cool million by retirement.

Make use of the power of compound interest in your financial life rather than letting the bank use compound interest against you through credit cards, mortgages and automobile loans. Compound interest is an amazing tool if you put away a percentage of your income away for retirement. When retirement occurs, you could do just about anything that you ever wanted--- just let it work for you and not somebody else.

rosejackal317

ATC Corporation is a manufacturer of new and replacement parts for the aircraft industry. The companyâs major customers are airlines, other aircraft operators (such as charter services), and contract maintenance service providers. Despite the economic slowdown, the company expects its sales to be strong for the several years, since many aircraft operators will be more interested in maintaining and repairing existing planes rather than buying new ones. At the present time, ATC is considering an upgrade to its manufacturing facility. This will involve replacing several older machines by the purchase and installation of a new, state of the art, computer-controlled metal cutting and shaping machine center made by a German supplier. Estimates of the machine centerâs costs and benefits are shown in the table below, where net cash flows are after-tax. Although the machinery should last for at least ten years, the company uses a five-year planning period for equipment of this type (based on depreciation rules and company policy). Since the machine will not be sold at the end of year 5, there is no salvage value to consider. Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Initial Costs: Purchase -3,600,000 Shipping -150,000 Installation -250,000 Cash Inflows: Sale of Old Machines 200,000 Investment Tax Credit 350,000 After-Tax Cost Savings 400,000 420,000 440,000 460,000 480,000 After-Tax New Sales 0 50,000 100,000 120,000 150,000 Depreciation Tax Savings 350,000 600,000 430,000 300,000 200,000 Increased Product Quality 10,000 20,000 25,000 30,000 35,000 Net Cash Flows: -3,450,000 760,000 1,090,000 995,000 910,000 865,000 Three important things to note are that the above cash flows have been adjusted to include an assumed inflation rate of 3% per year, the companyâs average tax rate is 30%, and that the investment project is considered to be 20% riskier than the companyâs average investment. Examination of ATCâs balance sheet reveals that the company uses the following types of financing (all percentages are based on market value). Financing Type Percentage of Total Financing Market Rate of Return Short-Term Debt 15% 3.5% Long-Term Debt 30% 5.25% Preferred Equity 10% 8% Common Equity 45% 12% If ATC does not make this equipment investment, it has no other real asset investment projects which it is considering. Therefore, an alternative use of the money in the capital budget would be a purely financial investment, such as stock, bonds, short-term CDâs, and so forth. 1. Based on your knowledge of current and projected economic conditions, does the companyâs assumption about future sales sound reasonable to you? Why or why not? 2. What cost of capital should the company use to analyze this investment project? 3. Without considering any other alternatives, is the machine a good investment for the company? Why or why not? 4. Without doing any calculations, discuss some possible alternatives which the company might have in terms of financial investments. Give some specific examples and make sure that you include a consideration of risk as part of your discussion. 5. Which choice would you recommend for the company? Why do you consider this option the best choice? 6. Suppose you are convinced that inflation over the next several years will be higher than the 3% which is forecast in the numbers the company is using in their projections. Without doing any further calculations, explain how you could adjust your analysis to account for this.

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