Question

Write a reflection paper of financial management that you covered in your class such as Analysis of financial statements, Time value of money, Bond valuation, Risk and Return, Corporate Valuation and Stock Valuation, The cost of Capital and The Basics of Capital Budgeting. Write minimum 2 pages as a reflection of what you learned from this class.

Answer 1

Time value of money or TMV explained that you can make a profit and get more money if you invest it now later. It is the principle of the value of money that is invested periodically with a specific interest rate that can be earned after the maturity date ends, it is also used to guide investors, which is other Compare the options according to which the given investment yields higher returns. The mathematical concept of the time value of money was discovered from the school of Salamanca by the end of 1491–1586 by Martin de Azpilcueta, a Spanish canonist, theologian and economist. Simple Interest Simple interest is known as the fastest method of calculating loan interest. This type of interest is mostly used in short-term debt; The loan is calculated by simple interest, multiplied by the principal amount of interest and time (probably: daily (monthly 360), monthly (12) or annual). Simple interest (I) = P xrxn P = Principal amount of loan = Rate of interest N = Number of compounding period (time) * Example: Suppose you want to take a loan of P10, 000.00 with an interest rate of 5%. Payment will be made for one year. What will be the interest? Are given; R = 5% or 0.05; P = P10, 000.00 and N = 1 I = P x R x T or I = P10, 000.00 x 0.05 x 1 I = P500.00
Your interest paid for 1 year with 5% interest rate will be P500.00. It is also beneficial (as a creditor) because if you can pay it in advance then it will reduce the interest you owe and pay it off as soon as you can. Compound Interest Compound interest is also known as "interest on interest", and is also a better type of interest used by investors, as it will increase faster than simple interest. The accumulated frequency of compounding will depend on the rate of compounding interest, which means; The longer the compounding period, the higher the compounding interest, the higher the return. The annual interest rate will be reduced to 1 (1) and then to the value of the initial amount of the loan by multiplying the principal amount by the sum of one (1) and increasing the number of compounding periods. Compound Interest. Compound interest = ([(? + ? ??) ? - =] where: P = principal amount of loan r = interest rate n = the amount of money invested or borrowed over the years m = the number of times that interest per year Compounding happens as often. * Example: You get P15, 000.00 today and you want to save it in the bank. The terms of the bank will give you a savings account with 6% annual interest rate which is compounded monthly. If you are 10 How much will you invest in a year Earned? Compound Interest =, 00015,000.00 [(1+ .06 12) 10 1 12 - 1] = [15, 000.00 [(1 + 0.005) 120 - 1]
= 315, 000.00 (1.81939673403 - 1) = 00015, 000.00 (0.81939673403) Compound Interest = P12, 290.95 * P12, 290.95 You will earn if you are going to invest your money for 10 years at 6% interest rate . Compound interest is often used in savings in a bank, loan or investment, it is more beneficial as a debtor because it will yield a much higher return because the interest is being accrued at a time different from the current balance. He is credited for the amount, which will earn him a lot. Present value Present value (PV) is the sum of future money that is worth today that will not equal it. Future cash flows are being discounted according to the interest rate, also known as the discount rate. The higher the discount rate, the lower the present value of future cash flows. Future Value Future value is the assumption of the value of an investment at a specified date of the future. This allows the investor to calculate his investment and predict its future value and is able to compare other options if it is invested today. Lump sum payment Lump sum payment is single payment.

Which can happen today or at some future date, in return for which many small payments are made regularly. It is calculated by: Future (compound) value ?? = ? (? + uted ?):
5. Present (mixed) value ?? = ((? + ? ??) Comp Where: FV = future value (face value) PV = present value (par value) r = interest rate n = money invested or borrowed over the years. Example of how often compounded per year is taken m = Example: You have invested your money in Xyz Company for a total of P350, 000.00 for 5 years with an annual interest rate of 7%. Future (compounded) value Using; ?? = ? (? + ? ??) ? = 000350, 000.00 (1+ 0.07 1) 5) 1 = ?350, 000.00 (1.07) 5 = 90490, 893.11 * After 5 years you will get your P490 total out of 893.11. Investment on Xyz Company. The lump sum payment can also use and give you very inexpensive loans in a small amount of annual payments such as a vehicle loan, home loan or gadget loan. On the other hand, it is also beneficial for the debtor as it can earn higher returns than the simple interest rate. But, the risk of this is that if you invest aggressively you can harm it.
6. Compound growth Compound growth is an investment made over a fixed period of time, which is calculated over a year with an average annual growth interest rate. It is also the simplest limit because it is calculated with an average increase that ignores volatility and implies continuous growth. Compound growth is the final value and part 1 of the original value divided by duration, and then subtracted by one. Compound Increment (CG) = (?? ?) ? ? - V Where: Vf = Last Value Vo = Original Value N = Number of Compound Periods * Example: Suppose you have invested your P500, 000.00 which started in March one. The coffee shop is in 24, 2017, by January 15, 2018 the following year it increases to 530, 000.00, and by March 24, 2019 it expires to 550, 000.00. We should find out how much your coffee shop grows. So, you finished a total of 2 years from the beginning of your business. Compound Growth (CG) = (?550,000.00 .00500,000.00) 1 2 - 1 Compound Growth (CG) = (1.1) .5 - 1 Compound Growth (CG) = 1.0488088481701515 - 1 Compound Growth (CG) =. 05 or 5% * After 2 years of your business in a coffee shop, the total growth of your compound has increased by 5% from March 24, 2017 to Mach 24, 2019.

The growth of the compound is mostly used as a presentation that describes how the company grows over time. An annuity is a series of payments in specified terms of an annuity period either monthly, quarterly, half-yearly or annually over a similar period of time that accumulates until it reaches its maturity. Examples of this are SSS, GSIS and other financial institutions such as insurance. It is divided into two types of annuities; Simple annuity and annuity payable, which can be resolved into future value or present value of annuity. Simple annuities are simple annuities. Payments or receipts occur at the end of each period that can be made monthly, quarterly, half-yearly or annually, as the annuity is due. It is calculated by the future value or present value; Future Value of Ordinary Annuity: of = ([(? + ?) ? Ann of Ord] Present Value of Ordinary Annuity: ?? = ??? [?− ? ? (? + ?) ? *] * Example: Suppose you invest. Doing your P5, 000.00 every year for the next 5 years, and you invested every payment at 5%. Solution to future value; FV = .05, 000.00 [(1 + .05) 5 51 .05 ] =, 5, 000.00 [0.2762815625 .05] =, 5, 000.00 (5.52563125) = ?27, 628.16 * After 5 years you put money in 5%. The future will be P27, 628.16. Annuity payable.
8. Liabilities are payments or receipts at the beginning of each period. The typical example is renting a house that requires payment at the start of the month until you take advantage of this full month's rent. It is calculated by the future value or present value; Future Value of Annuity Price: of = [{[(? + ?) ? - (?] (? + ?)} Current Price Annuity Value ?? = ??? [? - ? (? + ?) ? *] * Example: You want to calculate your future balance after 5 years, today is the first deposit. You have deposited P1, 000.00 so far with 3% interest rate per year. Solution to future value;, = +1, 000.00 {[(1 + .03) 5 31 .03] (1 + .03)} =} 1, 000.00 {[0.1592740743 −1 .03] (1.03)} = ?1, 000.00 {[0.0937779296542147). 03] (1.03)} = ?1,000.00 [(5.30913581) (1.03)] = (1, 000.00 (5.4684098843) =, 5, 468.41 * P5, 468.41 will result if you are going to deposit it in the bank at 3% . Rate of interest for 5 years. Evergreen Evergreen refers to the infinite time that payments or receivables continue. It is also a type of annuity that finds the present value of a company's cash.
9. Flow when missed back at a fixed rate. To get reimbursement you have to multiply the pay per interest rate divided by 1. Where: PMT = principal amount of each period R = interest rate per period ????? the (??) = ? Example ??? * Example: You are planning your retirement; You are making your monthly contribution to SSS at P500.00 per month and at that time the offer was 8% interest annually. ?? = ??500.00 1 .08 12 ? = .00500.00 1 .00667 ?? = 149500.00 (149.92503748125937) ? = ?74, 962.52 * If you start contributing today, you will get the total expected return after your retirement. P74, 962.52. Sustainable compound perpetual compounding is the interest that investors earn on their original investment, which is added on all interest that accumulates or continues over time.