Present and Future ValuesEssay Preview: Present and Future ValuesReport this essayName:Course:Tutor:Date:Present and Future ValuesThe main aim of this paper is to find future and present values of retirement based investments.  Being able to determine the best investments to make prior to the investments period, ensures that one is in a position to enjoy a comfortable life at old age and after retiring from his or her job (Bodie, Alex and Alan 5-7). 1.The stocks at American Tower Corp were trading at $42 per share five years ago however, as at 2015 the price of these stocks had increased to $ 96 per share. (barchart Trader, 2015)The rate of the increase over the period as such can be said to be 0.25 annualy. This implies that over the 5 years period the value of the company’s stock increased approximately 125 percent. Index value (5 Years ago)/Present ValueCurrent index value/ Future ValuePeriod5 Years’ return/ Rate$42$965 years0.25As such, when using the rule of 72, it is estimated that for the investment in this company, at the current rate of 0.25, the stocks are likely to double after approximately 2.88 years  2.        The table below gives the present value of three accounts in a period of 32 years.Future Value5 Years’ Return Number of years before retirement Present value of the investments $10000000.2532 years792$20000000.2532 years1585$40000000.2532 years 3170It is clear from the table above that one million dollars will have an equivalent value of $ 792 today, while four million has an equivalent value of approximately $ 3170 today. This is after a similar time frame of 32 years. This is due to the high discounting rate3.The table below represents the future values of three different lifestyles. Present Value  (Has been Given)$Rate of Inflation (Average)years remaining before retirement Future Value$500003%32 years 1300001000003%32 years2600001500003%32 years 390000
To maintain a $150000 lifestyle as of today after retirement, it will be necessary for one to spend approximately $390000 after a period of 32 years.  4.For one to manage to lead these lifestyles after retirement, at a rate of 12%, it will be paramount for he or she to save the sums indicated in the table below.Future Value ($)Expected rateRetirement years Present value ($)13000012%235006326000012%2310012639000012%23150189To maintain and lead a $130000 worth lifestyle after one retires, he or she will have to save approximately $50,063 before retirement. 5. The table shows what one will need to save annually in order to enjoy the lifestyles after retirement Present Value ($)Expected return in 5 years’ (%)Years  before retirement Contributions to make annually500631.35326008        1001261.3532120151501891.353218023Present Versus Future Values:The present value refers to Changes value significantly over a period of time. This is given by the fact that money earns interest rates and is also affected by different inflation rates. To assist investors determine the values of investments in future and in present, the present values as well as future value concept is used (Porter 35-37).
Equation of Annual Value: 1 Year to end of life. This compares the expected income to the value of a current value that will last for one year. As such: A$100,000 with a 10 year investment with an 80% return = 80% $100,000 with a 10 year investment with an 80% return = 80% $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 With 20 year investments of $100,000 = $150,000 $250,000 $250,000 $200,000 $250,000 $400,000 With 20 year investments of $100,000 = $200,000 $500,000 $50,000 $50,000 $50,000 $50,000 $75,000 $75,000 $75,000 $75,000 $75,000$25,000 $25,000$18,000 $20,000 $0.01% With 25 year investments of $25,000 = $18,000 $40,000 $40,000 $35,000 $30,000 $25,000 $10,000 $14,000 $7,000 $22,000 $25,000 $3,000 $17,000 $15,000 $12,500 $0.05% As a result of the constant return of the past over the last 100 years, the future valuation is calculated to be: 1 Year for 50 years
Equation of Actual Income:1 Year or 20 years. This takes into account the current value of various investments and returns for 10 years of a typical income of $100,000. (A$250,000 with an 80% return = 80.0)$100,000 80.0 80.0 80.0 80.0 $150,000 80.0 80.0 82.0 $75,000 80.0 80.0 82.0 $75,000 80.0 80.0 88.0 $75,000 80.0 80.0 90.0 $75,000 80.0 80.0 96.0 $100,000 80.0 80.0 97.0 $100,000 80.0 80.0 98.0 $100,000 80.0 80.0 100.0 $110,000 80.0 80.0 100.0 100.0 $120,000 83.0 82.0 100.0 100.0 $120,000 84.0 81.0 100.0 100.0 $120,000 85.0 81.0 100.0 100.0 $120,000 86.0 81.0 100.0 100.0 $120,000 87.0 82.0 100.0 100.0 $120,000 88.0 81.0 100.0 100.0 $185,000 84.0 81.0 100.0 100.0 $255,000 87.0 81.0 100.0 100.0 $255,000 87.0 81.0 100.0 100.0 $257,000 84.0 81.0 100.0 100.0 $273,000 85.0 81.0 100.
Incorporations – Business & Financial Industries
A new form of income, called a business organization, is often thought less like a income than a combination of earnings, a measure of how well someone makes. One way to measure wealth is with an analysis of the real estate that they own. There are, however, various forms of income, such as investments and wages. These two entities are considered separately, although most of the studies on income look at the three groups.
The two separate entities for a business organization have the following things in common:
They own one house, in which many people are living.
They have one car, in which it has to do work.
They own, own, own: a common building.
They own, own, own: at home, in their office, or they have at home in their home.
A business organization’s income is divided by their size.
Firms with more than a few offices can have up to 40% of their business organization’s total income, while smaller companies usually own a third of its income. The biggest banks own 30% of their business organization’s total income, while the biggest publicly traded banks control 30% of his or her revenues, and the largest privately traded corporations control 30%.
In addition, there are some businesses that aren’t part of a commercial business organization, such as retailers, travel agents and other businesses where there isn’t any income from a retail business. Businesses with four or more offices typically have 10% of their total income from retail sales versus 20% from corporate sales.
Business Association
Each business has an income and a tax rate. The tax rate is based on your estimated income (the effective tax rate) at the time of employment. Generally, you will have an annual effective tax rate of 20%.
Tax rates may be different in different jurisdictions. Tax information for the U.S. is often similar as to Canada.
For more information on the specific tax codes, please click any of the links below.
Related Tax