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Offlinenugjug
Wanderer


Registered: 11/07/05
Posts: 703
Last seen: 5 years, 11 months
Homework help please * 1
    #7952954 - 01/29/08 09:16 PM (16 years, 3 days ago)

Here is the question:

1. (1 POINT) Investment A will return $1 two periods from now and can be purchased for $0.9070. Investment B will also return $1 two periods from now and can be purchased for $0.8264. What is the present value of each investment if the $1 is received 50 years from now? What accounts for the differences in value?

The chapter we are supposed to be answering this from is over Net Present Values. He wants us to show our work in excel using no pre built in functions. I was thinking using each of the purchase costs as the present value and solving for the interest rate and then applying that to the 50 year term to figure out the new PV. However I don't know how i could solve for the interest rate without using the sqrt function or a PV function. I don't even know if that is the right way to do the problem.

Any suggestions would be greatly appreciated.


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OfflineSmackshadow
It's Time for Wild Speculation


Registered: 09/27/05
Posts: 575
Last seen: 19 days, 13 hours
Re: Homework help please [Re: nugjug] * 1
    #7958346 - 01/30/08 10:46 PM (16 years, 2 days ago)

Is that how he worded the question? Because that makes no sence. I have a Degree in Finance and I have no idea what he wants.
Things that need to be defined are:
Period
No perexisting functions
If he wants the present value of $1, 50 years from now.
between what values he wants the differences


--------------------
The trouble with fighting for human freedom is that one spends most of one's time defending scoundrels. For it is against scoundrels that oppressive laws are first aimed, and oppression must be stopped at the beginning if it is to be stopped at all.
     
~H. L. Mencken~


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InvisibleNoetical
Flip Horrorshow

Registered: 11/28/04
Posts: 9,230
Re: Homework help please [Re: nugjug] * 1
    #7958601 - 01/30/08 11:44 PM (16 years, 2 days ago)

1=0.9070(1+x)^2

x=(1/0.9070)^(1/2)

=X*


1=y(1+x*)^50

1/((1+x*)^(1/50))=y

=y*

???


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Offlinenugjug
Wanderer


Registered: 11/07/05
Posts: 703
Last seen: 5 years, 11 months
Re: Homework help please [Re: Noetical] * 1
    #7963313 - 02/01/08 02:56 AM (16 years, 23 hours ago)

Yeah he has this really bad habit of making questions really ambiguous so he can use it as a building block to explain some completely irrelevant topic in relation to the text. Essentially what he wanted us to do was set the 0.907 and the 0.8264 as the PV and the 1 dollar as the FV and solve for r and from there use these two r's to solve for PV 50 years from now in each case. Well you can do that with the sqrt function but I didn't know if we were allowed to do that because he is always saying "no canned functions". Turns out we are but what he really wanted us to do was set it up in excel and plug and play till we guess 'r'. I used my financial calculator to figure out what r was in both cases and set up my excel table to look like I guessed and checked and hoped that's what he wanted and it ends up I was right.

I think that is completely ridiculous. He said he wants us to get used to setting up problems where we can change any variable in the equation and get used to guessing all the possible outcomes. He's a pedantic condescending assumptional asshole. He assumes we understand things he hasn't discussed and aren't in the text and then glosses over them in explanation.

He also speaks with such a condescending overly analytical tone and gives examples far outside the scope of our homework that we assume things are much more difficult than they are. This is supposed to be a senior level/intro graduate level course and so far I've yet to see anything above my intro Finance class.

Thank you guys for your input and thank you Smackshadow for making me feel better about a completely uninformative and illogical question that required quite a bit of assumption as to what he was looking for. The question is worth about 0.07 % of my grade and I spent 2 hours fretting over what the hell he wanted us to do and by some dumb luck gave up and ended up doing what he was expecting.


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OfflineSeussA
Error: divide byzero


Folding@home Statistics
Registered: 04/27/01
Posts: 23,480
Loc: Caribbean
Last seen: 2 months, 20 days
Re: Homework help please [Re: nugjug] * 1
    #7963587 - 02/01/08 06:18 AM (16 years, 20 hours ago)

> He's a pedantic condescending assumptional asshole.

You just described around 90% of all college professors. Let me guess, he often uses the phrase "In the real world" as if he knows.


--------------------
Just another spore in the wind.


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InvisibleNoetical
Flip Horrorshow

Registered: 11/28/04
Posts: 9,230
Re: Homework help please [Re: Seuss] * 1
    #7965110 - 02/01/08 02:11 PM (16 years, 12 hours ago)

If business professors were any good at what they did they wouldn't be teaching, they would be clocking dollaz yo!

Nug: That guy sounds like a fuckwad. I came into finance with a very heavy math background and found it ludicrous who poor most of my professor's understandings were of the mechanics (ie:mathematics) of their methods. Most of them would be fuckin' lost and useless with out a Financial calculator.


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Offlinenugjug
Wanderer


Registered: 11/07/05
Posts: 703
Last seen: 5 years, 11 months
Re: Homework help please [Re: Noetical] * 1
    #7972261 - 02/03/08 10:15 AM (15 years, 11 months ago)

I switched to finance from an engineering major so I have a pretty healthy understanding of the mathematics as well. I will have to give this guy minor props in that he does stress knowing the math as much as knowing the theory of what the answer means. Apparently he was bout 6 hours shy of a mathematics undergrad before he switched degree plans.


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