Time value of money

You have done a great job overall on your assessment! You discussed in detail the concept of cash flow and the relationship between PV and FV, as well as PV and changing interest rates, and most calculations are correct. Please see my feedback below and resubmit the assessment once you revise the calculations highlighted below. 

Please refer to Weaver and Weston (2001), Chapter 3 on Future Values or reach out to our course tutor for guidance, and highlight your changes.

Keep up the great work!

Dana 

COMPETENCY: Evaluate the global financial environment.

CRITERION: Calculate the future value of an initial deposit.

DISTINGUISHED

PROFICIENT

BASIC

NON-PERFORMANCE

Distinguished

Calculates the future value of an initial deposit and explains the calculation. 

Faculty Comments:“

Excellent job on your calculations of the future value of a $250 investment at 4%, 6%, and 7% after nine years! How would the future value after 3 years be impacted if the present value stayed the same, but the interest rates were 4% in the first year, 6% in the second year, and 7% in the third year? 

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CRITERION: Calculate the future value of a savings account.

DISTINGUISHED

PROFICIENT

BASIC

NON-PERFORMANCE

Basic

Calculates the future value of a savings account using inaccurate or incomplete data.

Faculty comments:“

The calculations of the future value of $450 at the end of the third year are incorrect! Please refer to weaver and weston (2001), chapter 3, future value for a refresher and examples on future value using compounded interest, then revise the calculations, keeping in mind that the interest is compounded annually.  

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CRITERION: Calculate the annual rate of return on an investment that has increased in value over time.

DISTINGUISHED

PROFICIENT

BASIC

NON-PERFORMANCE

Basic

Calculates the annual rate of return on an investment that has increased in value over time using inaccurate or incomplete data. 

Faculty comments:“

The calculations of the annual rate of return are incorrect! Please refer to weaver and weston (2001), chapter 3, future value to revise your calculations. 

”

COMPETENCY: Define finance terminology and its application within the business environment.

CRITERION: Explain the concept of cash flow in corporate finance.

DISTINGUISHED

PROFICIENT

BASIC

NON-PERFORMANCE

Distinguished

Analyzes the concept of cash flow in corporate finance and connects the analysis to relevant real-world situations. 

Faculty comments:“

You did a very good job on your definition of the concept of cash flow! In accounting, cash inflows and outflows are recorded on the statement of cash flow, which separates a company's activities in operating, financing, and investing activities. In finance, the purpose of cash flow is to show what money comes in and what money goes out in a specific period of time. Knowing this, what is the relationship, if any, between cash flow and profitability? 

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CRITERION: Explain how present value and future value are related.

DISTINGUISHED

PROFICIENT

BASIC

NON-PERFORMANCE

Proficient

Explains how present value and future value are related. 

Faculty comments:“

You did a very good job describing the relationship between present and future values! In practical, real-world situations, what would be one instance in which you had to analyze the future value of a present purchase or investment, or the present value of a future value of a purchase or investment? 

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COMPETENCY: Evaluate the financial health of an organization.

CRITERION: Explain how present values are affected by changes in interest rates.

DISTINGUISHED

PROFICIENT

BASIC

NON-PERFORMANCE

Proficient

Explains how present values are affected by changes in interest rates.

Faculty comments:“

Very good job on your explanation of the relationship between changing interest rates and present values! Please provide a detailed example as well to show the relationship. For example, if the future value of an investment were $1,000 and the interest rate changed from 5% to 9%, how would the present value change? 

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