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Fundamentals of Corporate Finance, 4/c/e

Fundamentals of Corporate Finance, 4/e

Stephen A. Ross, Massachusetts Institute of Technology
Randolph W. Westerfield, University of Southern California
Bradford D. Jordan, University of Kentucky
Gordon S. Roberts, York University

Introduction to Valuation: The Time Value of Money

Internet Application Questions


1		The following web-link shows the power of compound interest. The link assumes an investment of $1made by Jesus in the year 32 B.C. Fill in the rest of the table, assuming a low interest rate (e.g. 2 percent per year). You will be amazed to find what a single dollar of investment would have grown to by 2000 A.D http://www.funk.co.nz/java/jesus-investment.html



2		The City of Toronto offers two payment plans for property taxes — a six-instalment plan and an 11-month payment plan. In addition, you can always pay your taxes in full by the last day in May. If you are thinking of choosing between the one time payment (obviously on May 31) and the 11-month option, which would you pick? Assume that you can invest your money at a rate of 1/2 percent per month and that your annual property tax is $2,200.

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