True Value of Money Calculations 1. FV of a lump sum LASCO’s 2018 sales were $200 million. If sales grow at 11% per year, what will be the sales10 years later, in 2028, in millions? 2. PV of a Single amount (lump sum) Suppose a government bond will pay $1,000 three years from now. If the going interest rate on 3‐year government bonds is 4%, how much is the bond worth today? 3. Interest rate on a simple lump sum investment The Government of Jamaica offers to sell you a bond for $1228 No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $4,000. What interest rate would you earn if you bought this bond at the offer price? 4. Number of periods Petcom’s 2021 earnings per share (EPS) were $2, and its growth rate during the prior 5 years was 9.0% per year. If that growth rate were maintained, how long would it take for the company’s EPS to double?
True Value of Money Calculations
1. FV of a lump sum
LASCO’s 2018 sales were $200 million. If sales grow at 11% per year, what will be the sales10 years later, in 2028, in millions?
2. PV of a Single amount (lump sum)
Suppose a government bond will pay $1,000 three years from now. If the going interest rate on 3‐year government bonds is 4%, how much is the bond worth today?
3. Interest rate on a simple lump sum investment
The Government of Jamaica offers to sell you a bond for $1228 No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $4,000. What interest rate would you earn if you bought this bond at the offer price?
4. Number of periods
Petcom’s 2021 earnings per share (EPS) were $2, and its growth rate during the prior 5 years was 9.0% per year. If that growth rate were maintained, how long would it take for the company’s EPS to double?
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