Time Value Analysis And The Attractiveness Of Alternative Investments Finance Essay - Free Essay Example

Sample details Pages: 4 Words: 1146 Downloads: 6 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Time value analysis The time value analysis can provide the healthcare manager with the necessary information to make important decisions concerning financial strategies. The calculations of future cash flows at specific times are used to determine the attractiveness of alternative investments. The major limitation of the time value analysis is that a small change in cash flow may result in a distorted assessment of a potential investment. Incremental cash flows should be estimated with great care to consider only those that could change if a project or investment is accepted. The time value analysis of the Pensacola Surgery Centers will explore the companys investment opportunities. The company has $50,000 in cash to invest in marketable securities. The option to invest in a bank certificate of deposit (CD) that return interest after 6 months to five years. The earned interest would be reinvested at its maturity date. The future value of a one year CD that pays 10 percent annual interest will tota l $55,000 at maturity (Table 1). The future value of a one year CD that pays 5 percent or 15 percent will total $52,500 and 57,500 respectively. The other considerations are the banks procedure of compounding the interest. The BankSouth offers a one year CD at 10 percent interest that is compounded semi-annually. This effective annual rate of 10.25 percent will yield a higher total of $55,125 that the annual CD. The Bank of America offers a 10 percent Certificate of Deposit (CD) $50,0000 Investment 10% Annual Interest 10% Semi-Annual Interest (10.25% effective) 10% Daily Interest (10.52% effective) 1-Year CD $55,000.00 $55,125.00 $55,257.79 5-Year CD $80,525.50 $81,444.73 $82,430.42 Table 1: Certificate of Deposit Summary. CD that compounds daily. This results in a higher yield of $55,258 with an effective annual rate of 10.52 percent. The BankSouth will likely offer a competitive rate on its semi-annual compounding CD o f 10.3 percent to yield a total of $55,283. The effective annual rate becomes 10.57 percent. The Pensacola Surgery Centers can place $50,000 cash in a five year CD, and have the potential to significantly increase the earned interest. This will not allow other investments to utilize these funds during this five year period. The five year CD with interest compounded annually yields $80,525. The semi-annual interest CD totals $81,144.73, and the daily interest CD yields $82.430. The surgery clinic has the financial goal of having $200,000 available for the purchase of a patient billing system in five years. If the clinic invested a lump sum in a one year CD with 10 percent annual interest, it would need to deposit $124,184.26 today. Another choice would require the deposit of $100,000 in a five year CD with an annual 15 percent interest to result in the necessary $200,000 in funds. The Pensacola Surgery Center may consider the option of an ordinary annuity to build the funds nec essary for the computer application. The ability to make yearly payments to the account rather than an initial lump sum will decrease the amount of cash flow deterred from other investment opportunities. If five annual payments of $32,000 are paid at the end of each year, the present value result is $121,305 with an annual opportunity cost of 10 percent. The increase to $138,543 will result if the interest is compounded semi-annually. The future value of the annuity that pays 10 percent interest annually is $195,363, and decreased to $176,820 if compounded semi-annually. The annual interest necessary to accumulate the necessary $200,000, by making the $32,000 yearly payments, is 11 percent. Alternatively, the annual payment of $32,759.50 with 10 percent interest is needed to reach the $200,000 in funds. If the payments are changed to $16,000 every six months, starting six months from today, the future value would total $254,999 with 10 percent annual interest (Table 2). The future v alue of the payments with 10 percent interest compounded semi-annually yields $201,246. The $16,000 semi-annual payment schedule will accumulate the necessary funds for the capital expenditure. Annuities $16,000 Semi-Annual Payments Future Value 10 % Annual Interest Future Value 10% Semi-Annual Interest Ordinary Annuity $254,998.79 $201,246.28 Annuity Due $280,498.67 $211,308.59 Table 2: Future Value of Annuities Summary. The annuity due type is when the payments are made at the beginning of the period. This type of annuity will result in the maturity one period past the final payment. The present value of the same five annual $32,000 payments will yield $133,436 with an opportunity cost of 10 percent annually. The utilization of a 10 percent semi-annual interest rate will result in $145,470. The future value of the annuity if 10 percent annual interest is paid yields $214,899, and with 10 percent semi-annually the result is decreased to $185,661. The annual interest rate of 8 percent is needed to accumulate the required $200,000 funds with the yearly $32,000 payments. The reduced yearly payment of $29,781 is needed for an annuity with a 10 percent annual rate. The change of the payments to $16,000 every six months results in $280,499 in an annuity that compounds at 10 percent annually. This is decreased to $211,309 if the 10 percent interest is semi-annual. The annuity due with semi-annual payments results in a greater accumulation of funds necessary for the computer billing upgrade. The Pensacola Surgery Centers would like to lease out extra space at one location for the term of five years. This venture will cost an estimated $40,000 in initial renovations. The net present value (NPV) of the estimated lease cash flow totals $58,618 (Table 3). The future value of the five year lease cash flow is expected to total $76,223 when invested at 10 percent annually. The present value of this total yields only $47,329 (difference of $11,289) when compared to the NPV calculated initially. The inconsistency of the time value analysis is due to the incremental changes that may become magnified with end results. The manager must use reasonable judgment when interpreting these calculated results. End of Year Net Cash Flow 1 $12,000 2 $14,000 3 $ 2,000 4 $16,000 5 $20,000 Table 3: Estimated Lease Cash Flow The further analysis of the lease will determine the dollar return on the investment and include the cost of the renovations. The return on investment (ROI) of the lease cash flow and the renovations total $39,390. The percentage rate of return utilizes the internal rate of return (IRR) calculation. The expected rate of return is 16 percent which exceeds the 10 percent opportunity cost by 6 percent. The ROI calculations support the clinics financial investment in the lease agreement. The contingency plan if the clinic is unable to accumulate the $200,000 necessary for the computer improvements will require them to borrow the funds. The loan will require yearly payments of $63,094.16 for four years at 10 percent interest (Table 4). The total interest plus principal paid at the end of the loan is $252,376.64. The business will be able to deduct the yearly interest payments on their income taxes for a total of $52,376.64. $200,000 Loan Year Payment Interest Repayment of Principle 1 $ 63,094.16 $20,000.00 $ 43,094.16 2 $ 63,094.16 $15,690.58 $ 47,403.58 3 $ 63,094.16 $10,950.23 $ 52,143.93 4 $ 63,094.16 $ 5,735.83 $ 57,358.33 Total $252,376.64 $52,376.64 $200,000.00 Table 4: Loan Amortization Schedule The utilization of time value analysis aids in the financial decision making processes of the businesss investment management. The calculations attempt to represent the opportunity cost of these potential investments. The discount rate used to conduct the anal ysis should reflect the risk associated with the investment and the risk of the organization. Good decisions are based on the understanding of the businesss financial strategies, and the appropriateness of the analysis to these objectives. The post completion review of investment decisions should be conduct to assess the processes and results. Don’t waste time! Our writers will create an original "Time Value Analysis And The Attractiveness Of Alternative Investments Finance Essay" essay for you Create order

Business - 4225 Words

The African Symposium: An online journal of the African Educational Research Network MANAGING BULLYING PROBLEMS IN NIGERIAN SECONDARY SCHOOLS: SOME COUNSELLING INTERVENTIONS FOR IMPLEMENTATION Oyaziwo Aluede Ambrose Alli University Abstract Bullying problem has remained pervasive and a going concern for all stakeholders of education who desire to make school climate a safe haven. This paper is moved by this desire, by bringing into context the meaning of bullying and prevalence of bullying around the globe. The paper further brings into perspective bullying situation in Nigeria and prescribes intervention for bullying prevention in schools. These include; provision of helping services for schools; sensitization and capacity building of†¦show more content†¦Meaning of Bullying Behaviour Bullying is a pervasive problem in schools that affects a lot of students. In recent times, it is becoming a bigger crisis with vicious consequences. Bullying is not just a child’s play, but a terrifying experience many school children face everyday (Aluede, 2006; Beran , 2005; Craig, 1998; Thornbery, 2010). As Beran (2005) further noted, in spite of school officials, teachers, parents and students exerting great efforts to make schools friendlier and safer places, a reduction of bullying is not always evident, as threats of attacks in schools often leading to breakdown of rules and orders are often the case in many Nigerian schools. What then is bullying? Defining bullying has been a very difficult task, as no single definition can cover all aspects of bullying. Notwithstanding, bullying is a form of aggression, a particular kind of violence to which students are exposed. It is a form of social interaction in which a more dominant individual (the bully) exhibits aggressive behaviour intended to cause distress to the less dominant individual (the victim). 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Nonviolence Martin Luther King, Jr. and Tich Nhat Hanh Free Essays

Upon engaging the text of Martin Luther King, Jr. ‘s anti-war speech â€Å"Beyond Vietnam: A Time to Break Silence,† one recognizes an undeniable continuity between King’s thinking and that of his contemporary Thich Nhat Hanh. It is important to note, however, that King’s reflections in this discourse are not entirely beholden to his Buddhist counterpart. We will write a custom essay sample on Nonviolence: Martin Luther King, Jr. and Tich Nhat Hanh or any similar topic only for you Order Now The overarching concepts of â€Å"interbeing† and interrelation which drive the speech were evident in King’s work and philosophy well before his correspondence with Nhat Hahn. The similarities regarding each man’s approach to these notions should be expected given their respective spiritual vocations. Therefore, although King’s reflections in this address – which encompass the broader considerations of nonviolence and exhibit a direct rebuke of the war effort – mirror almost identically those made in writings by Nhat Hanh, it is unclear how directly the latter may have influenced the former. Regardless, this speech does reflect elements of Nhat Hanh’s nonviolent vision and does so specifically through considering the concept of mutuality in relation to addressing the roots of war, its effects and how to end it. In his address, King makes clear that humanity’s failures and the origins of violence stem from the propagation of illusions and artificial perceptions. In particular, King asserts that â€Å"the war in Vietnam is but a symptom of a far deeper malady within the American spirit†¦ ,† whereby Americans suffer from false â€Å"comfort, complacency [and] a morbid fear of communism†¦ † (King). This assertion is clearly reflective of Nhat Hanh’s observation that â€Å"thinking is at the base of everything [and that]†¦. ur thoughts can be misleading and create confusion, despair, anger or hatred,† and that â€Å"a civilization in which we kill and exploit others for our own aggrandizement is sick† (Nhat Hanh 68; 120). The societal illness both men perceive is rooted in a proliferation of fear and ignorance, or as King so forcefully asserts, â€Å"legions of half-truths, prejudices, and false facts† (King 14). The influence of th ese fallacies manifests itself most directly through manufactured notions about our enemies. By reducing our enemies to concepts that we can thoughtlessly abhor, we take no serious deliberation concerning our inherent reciprocity to them, and thus fail to realize the true extent our similarities. Though King had expressed similar sentiments previous to this speech, such as in his sermon â€Å"Loving your Enemies,† one cannot ignore the presence of a comparable position advocated by Nhat Hanh in his 1965 letter to King entitled â€Å"In Search of the Enemy of Man. † In that letter, Nhat Hanh professes that â€Å"[our] enemies are not man†¦ hey are intolerance, fanaticism, dictatorship, cupidity, hatred and [the]discrimination which lie in the heart of man† (Nhat Hanh). Nevertheless, it is clear that King recognizes this point, going so far as to declare: â€Å"We can no longer afford to worship the god of hate or bow before the altar of retaliation†¦ we must not engage in negative anti-communism [but]†¦ with positive action seek to remove those conditions of poverty, insecurity and injustice which are the fertile soil in which the seed of communism [as social strife] grows and develops† (King). As a result of this revelation, part of King’s speech calls for peace through an attempt to understand the enemy and the effects war has had on the Vietnamese people. This call for mindfulness clearly resonates with Nhat Hanh’s belief that â€Å"[a]ny nonviolent action requires a thorough understanding of the situation and the psychology of the people,† enemy and self alike (Nhat Hanh 40). King exhibits this understanding when stating that the Vietnamese â€Å"must see Americans as strange liberators† and begins a chronological account of the effects an American presence has had in Vietnam since 1945 (King). Speaking of the National Liberation Front, or what he deems in an ironic manner as â€Å"that strangely anonymous group we call VC or Communists†¦ ,† King asks â€Å"[w]hat must they think of us in America when they realize that we permitted the repression and cruelty of Diem which helped to bring them into being as a resistance group [in the first place]†¦ † (King). In essence, King is imploring Americans to put their view of â€Å"the enemy† into context, noting that U. S. actions have done little but imbed a â€Å"deep but understandable mistrust† in its enemies (King). Again, almost all of these deliberations are present in Nhat Hanh’s work. Nhat Hanh’s statement that â€Å"[e]very escalation of the war, every new contingent of U. S. troops†¦ wins new recruits to the Vietcong† reflects each man’s belief that the U. S. is undermining is own efforts in Vietnam because it has implanted soldiers there that â€Å"[know] and [care] little about [Vietnamese] customs and practices and [who are] involved in destroying Vietnamese people and property† (Nhat Hanh 50-51). Moreover, King’s optimistic position that the United States has the capability to transcend its obtuseness, reorganize its priorities and lead the cause for a peaceful end to war is a sentiment most certainly shared by Nhat Hanh. To this end, each man’s suggestions for ending the war are strikingly similar. In Love in Action Nhat Hanh offers five components that he deems necessary toward a U. S. solution to the war: 1) A cessation of bombing in the north and south. 2) A limitation of all military operations by the U. S and South Vietnamese. 3) A clear demonstration of U. S. intent to withdraw from the country. 4) A declaration of American neutrality and support of a popular government. 5) Extensive aid in the reconstruction effort. (Nhat Hanh 55). Likewise, King calls for an end to all bombing, unilateral ceasefire, curtailing military buildup, an acceptance of the NLF’s role in a future Vietnamese government, and a definitive U. S. withdrawal date. The proposals in King’s address are almost identical as both men call for material support as well as ideological understanding by America toward its enemies. In addition to these provisions, King demands that the American public take into account the effects war has had on our own soldiers and that they take active steps toward ending it. King calls for a movement away from a † ‘thing oriented’ society to a ‘person-oriented’ society† where the â€Å"business of burning human beings with napalm, of filling our nation’s homes with orphans and widows, of injecting poisonous drugs of hate into veins of people, of sending men home†¦ physically and psychologically deranged†¦ † is deemed unacceptable and impermissible (King). This too echoes portions of Nhat Hanh’s nonviolent vision, such as evidenced by his observation during the first Gulf War that â€Å"[s]oldiers live in hell day and night, even before they go into the battlefield, and even after they return home† (Nhat Hanh 75). Hoping that the American public can grasp these realities, King demands that â€Å"we must all protest† in order to awaken others to the fact that â€Å"the American course in Vietnam is an dishonorable and unjust one† (King). Again, although King’s attitudes here are not surprising given his own previous writings in nonviolence, when referencing the afore mentioned letter from Nhat Hanh to King, one cannot help but wonder whether the former’s description of a fellow monk’s self-immolation aimed at â€Å"[calling] the attention of the world [to]†¦. he suffering caused by this unnecessary war† in turn caused King to declare – in reference to anti-war protest – that â€Å"these are the times for real choices and not false ones† (Nhat Hanh; King). On the whole, though it is clear that King’s â€Å"Riverside Address† reflects both the large and small aspects of Thich Nhat Hanh’s nonviolent vision, wh ether these parallels were intentional or not is unclear. By their very nature, philosophies of nonviolence concern themselves with discipline and awareness of the self, as well as with understanding and empathy for the other. As a result, it is not surprising that King and Nhat Hahn, two practitioners of such philosophies, would both express their concerns about Vietnam around the same theme of humanity’s interrelated nature. Therefore, it is not so much important whether one’s work or ideas may have influenced the other’s as it is that both recognize a common bond between human beings and the supreme need to eliminate the conditions which threaten that inherent relationship. How to cite Nonviolence: Martin Luther King, Jr. and Tich Nhat Hanh, Papers