Hca 270 finance worksheet

Complete Part I of the Axia Material: Time Value of Money worksheet by defining the time value of money. Include a real-world example that illustrates the concept. Answer the questions:

 

·        

Why is time such an important factor in financial matters?

·         How might you use the principles of the time value of money to your financial benefit?

 

Complete Part II by calculating the present value, internal rate of return, and payback period depicted in the worksheet.

 

Post your assignment as an attachment.

Time Value of Money

HCA/270 Version 3

1

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.

Define the time value of money.

Provide a real-world example for the time value of money.

Why is time such an important factor in financial matters?

How would you use the time value of money to your financial benefit?

Part II: Complete the following table by calculating the ratios.

Present Value

Annual

Amount	Compounding period		Rate of interest	Present value
	$100,000		Annual	6% for 10 years
$70,000	4% for 15 years

Internal Rate of Return

Rate of interest

Initial cost of investment	Periods of useful life	Estimated annual net cash inflow generated	Look-up table value
$75,000	10	$10,190
$56,000	6	$12,115

Payback Period: Assume there are no income taxes for both scenarios.

$100,000

10 years

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
$550,000		10 years	$32,000	$55,000
$350,000	$80,500	$36,000	$35,000