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Purpose
The purpose of this assignment is to assess your ability to:
Explain the rationale behind the time value of money.
Apply theoretical knowledge to a real-world setting.
Use APA formatting in research-based communication.
Action Items
Complete the following items listed in the Week 6 Reading and Preparation object:
View “Time Value of Money” in the Week 6 Media object.
Review “Make Better Business Decisions Using the Time Value of Money.”
Access the free “time value of money calculator.”
Read “Understanding the Time Value of Money.”
Practice using the time value of money calculator by replicating the following calculations in the Blackman
article:
No. 2: How to Calculate Future Value
No. 3: The Value of a Regular Income Stream
Imagine that you are a financial advisor preparing a presentation for your client Bob, who is 25 and has received
an inheritance. Your goal is to address the following three scenarios and make a recommendation based on the
time value of money and Bob’s best interests.
Create an 8- to 10-slide Microsoft PowerPoint or Prezi presentation to the young employees, in which you:
Illustrate the time value of money by addressing the following three scenarios:
Bob has directed you to invest \$10,000 of his inheritance for his retirement 40 years from now.
If his investment earns 6% per year for 40 years, how much will his investment be worth? Show
the present value, rate, periods, and future value.
Bob has told you that he wants to have \$500,000 saved by the time he retires in 40 years. How
much of his inheritance would he need to invest now, assuming he can earn 6% interest per year?
Show the present value, rate, periods, and future value.
You advise Bob that \$500,000 will not support his desired standard of living in retirement and
want to encourage him to invest every month. Because he is 25 and is earning an annual income
of \$40,000 (\$3,333 per month), you recommend that he invest \$500 each month. At an interest
rate of 6% per year, how much money would Bob have in 40 years? Show the monthly payment
(enter it as a negative number because Bob will be paying out that amount each month), rate,
periods, and future value.
Recommend an investment strategy that is appropriate for Bob.
Compose a script for each slide in your presentation using the notes section of Microsoft PowerPoint, or
a Microsoft Word document if using Prezi. Be sure to include a link to your Prezi.
Cite any resources used in APA format.
Submission Instructions
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