Accounting Time Money Worksheet
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week_6_worksheet_time_value_money.doc|
Time Value of Money HCA/270 Version 3 |
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Associate Level Material
Time Value of Money
Resource: Ch. 12, 12-A, & 12-C of Health Care Finance
Part I: Complete the following table by inserting your responses to the questions. Cite any sources you use.
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Define the time value of money. |
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Provide a real-world example for the time value of money. |
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Why is time such an important factor in financial matters? |
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How would you use the time value of money to your financial benefit? |
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Part II: Complete the following table by calculating the ratios.
Present Value
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Amount |
Compounding period |
Rate of interest |
Present value |
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$100,000 |
Annual |
6% for 10 years |
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$70,000 |
Annual |
4% for 15 years |
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Internal Rate of Return
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Initial cost of investment |
Periods of useful life |
Estimated annual net cash inflow generated |
Look-up table value |
Rate of interest |
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$75,000 |
10 |
$10,190 |
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$56,000 |
6 |
$12,115 |
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Payback Period: Assume there are no income taxes for both scenarios.
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Purchase price of equipment |
Period of useful life |
Annual revenue generated per year |
Operating costs associated with revenue |
Depreciation expense per year |
Payback period result |
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$550,000 |
10 years |
$100,000 |
$32,000 |
$55,000 |
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$350,000 |
10 years |
$80,500 |
$36,000 |
$35,000 |
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