# 1. How is the curvature of a closed curve obtained? Find the radius of curvature and curvature of a.

TOPIC C – posted Thursday#1) You can readily understand why forecasting net cash flows is a necessary skill in financial management. SO, how do we forecast cash collections from customers? Sales RevenuesNovember \$        50,000actualDecember \$        75,000actualJanuary \$        20,000actualFebruary \$        15,000ForecastIf the credit manager tells us cash is collected from credit sales, as follows:25% is collected in the month of sale50% from the prior month’s sales20% from two months ago3% from three months agoa) Is it okay that the total collected is only 98% of sales? How do you explain this?b) How much cash will be collected in February?#2) Some wrap-up questionsa) How is a single payment different from an annuity?b) What are some of the ways that time value of money concepts are used in the finance profession?c) What is the difference between discounting and compounding? Which term applies to future value calculations? Which one applies to present values?TOPIC B – posted TuesdayThere are many uses of the calculations we are discussing. For example, the Present Value of the cash flow from a bond payable determines its current cost to an investor (or borrower).A bond has two sources of cash, 1) the interest payments, paid at the stated rate (%) usually semi-annually and 2) the single-sum paid upon maturity to the investor/lender. Each of these is a separate variable in the =PV function. The interest rate input into the PV function is called the yield-to-maturityand is often different from the stated interest rate used to calculate the bond periodic interest payments.Use this template PVFunc.png for the Excel function  =pv(rate,nper,pmt,fv) to calculate the solution to these exercises:a) What is the present value of bond payable when the current market interest rate is 5% and whose semi-annual payment is based on an annual coupon rate of 4% over the next 20 years? The Future Value is \$100,000.b) Alltech Corporation on January 1, 2017, issues \$100,000 of 5% bonds due in 5 years with interest payable annually at year-end.The current market rate of interest for bonds of similar risk is 6%. What will the buyers pay for this bond (the PV) at issue?c) Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand issuing \$3,000,000 of 11% term corporate bonds on March 1, 2017, due on March 1, 2032, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 10%. Determine the selling price of the bonds.TOPIC A – posted SundayThis week can be quite easy if we use the Excel functions described in the week’s lesson. FIN515_wk2_TVM2A_Recording_edited (1).mp4The idea is that you can calculate in today’s dollars, the value of say a series of loan payments. Finance managers may use this present value (PV) to determine if refinancing is justified.(A) For example, what is the PV of a \$100,000, 30 year mortgage, with a 4% stated interest rate?

Assuming the current market interest rate is 5%
Assuming the current market interest rate is 4%
Assuming the current market interest rate is 3%

Here’s a snapshot of the Excel function that solves the first question (5%) (B) SO why is an investment paying 4% sold at a discount, if alternative investments pay 5%?There is also a tutorial video in this week’s lesson about using Excel for TVM calculations. If you are comfortable with these functions, try some of these exercises:(C) Please respond to a handful of these preliminary questions1) What is the difference between future value and present value? What data do you need to do a future value or present value calculation?  What are various ways to calculate the time value of money in addition to using the future value and present value formulas? 2)  A given amount of money today is worth (more or less) than that same amount of money a year from now. Other things being equal, a higher interest rate on a car loan will result in (higher or lower) payment?  Other things being equal, a longer term on a car loan will result in (higher or lower) payment?3) Which of the following variables, whether stated or implied, are always present in an =PV or =FV calculation:   PV, FV, i, n, or PMT?4) Rita is wondering how much of a car loan she can get if the interest rate is 3% and she is willing to pay \$200 per month for 5 years. She is looking for the _____ function. Laura wants to contribute \$5,000 each year to her 401(k). The investments in the 401(k) are expected to earn a rate of 10% per year. She is wondering how much money she will have when she retires in 25 years? She is looking for the _____ function.5) Michelle is 45 years old. She plans to retire when she is 65 years old. She figures she will have \$1,000,000 in her 401(k) when she retires. The 401(k) will be invested in a fund that has a guaranteed rate of 5%. After retirement, she plans on living another 20 years. She wants to leave an estate of \$200,000 to her grandchildren. She wonders how much she can withdraw from her 401(k) per year after retirement and accomplish her goal of an inheritance for her grandchildren?

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