Posted: January 13th, 2016

ABC Golf Equipment Corporation

The Time Value of Money and Financial Statement Analysis
Case Assignment: (Must use Heading for paragraphs)
Solving Present Value and Future Value Problems
You are the CFO (Chief Financial Officer) of ABC Golf Equipment Corporation, a small company that sells golf equipment. Mr. Hillbrandt, the new CEO (Chief Executive Officer) has a marketing background and is trying to learn more about the financial side of running a business. He wants your help and asks for an introduction to the concept of time value of money.
The value of a typical corporate bond is the present value of an annuity plus the present value of a lump sum. Thus, if an individual does not understand how to calculate the present value of a lump sum or the present value of an annuity, it is difficult to determine the value of a typical corporate bond. Thus, in this case assignment, you will work through a variety of time value of money problems to illustrate the idea to the CEO.
The following websites include a number of formulae and financial calculators, including Present Value, Future Value, and Annuity:
Financial calculators. (2015). Calculator Soup. Retrieved from http://www.calculatorsoup.com/calculators/financial/
Carther, S. (2015). Calculating the present and future value of annuities. Investopedia. Retrieved from http://www.investopedia.com/articles/03/101503.asp
Required:
Compute and show your work for the following scenarios:
• Calculate the present value of the following lump sums: