Time Value Of Money I have attached what I have so far. Please tweak/correct as needed. Thank you!

Scenario

You are currently a financial analyst within Blue Butterfly Company, a small family owned corporation that manufactures magnetic bookmarks. Blue Butterfly management would like to provide a contributory pension plan for five current members of the management team. Management believes they can afford to invest $10,000 per month for the next 10 years. They anticipate the rate of return will be 8%. At the end of the 10 years, they expect retiring employees to start withdrawing from this pension plan. The anticipated longevity after retirement is expected to be 20 years, and management believes the rate of return on the investment to continue through the 20 years of retirement payout. Management has requested your assistance in determining relevant values so they can finalize the components of the pension plan.

Instructions

Using Excel, develop a spreadsheet presentation that covers the following:

Explain the concept of the time value of money, including the present and future value of $1, and present and future value of an annuity. Explain the difference between the annuity payment at the beginning and the end of the period.

Demonstrating the future value of the monthly cash investments for the next 10 years given the investment earns the projected 8% annual return.

In Excel, calculate the total monthly payment that can be withdrawn from the investment over 20 years given the anticipated 8% annual rate of return continues to be met through the 20 years of retirement. Provide management the monthly payment amount that will be available to payout in monthly pension amounts.

Assuming all five members of management will receive the same monthly annuity payment, provide management the proposed monthly retirement payment that can be offered to these five members of management.

Use the built-in cash flow functions in Excel to perform all calculations, explaining in the adjacent cells the values you entered the function. Explanations

Money is worth more now than it will be at a later period due to the possibility for profits in the interim. This is a fundamental financial principle. The present discounted value of money is another term for the time value of money.

The present value formula is PV=FV/(1+i)n, where you divide the future value FV by a factor of 1 + i for each period between present and future dates. Input these numbers in the present value calculator for the PV calculation: The future value sum FV. Number of time periods (years) t, which is n in the formula. The amount to which $1 grows at compound interest for a particular number of years at a specified interest rate is called the Future Value of $1.

For annuities, the amount of money that must be invested in order to accomplish a given future goal is referred to as present value.

The cash amount that will accrue over time when that quantity is invested is called future value.

The amount you must invest in order to obtain the future worth is known as the present value.

An annuity due is one whose payment is due right away at the start of each term. Rent is a good example of an annuity due payment since landlords often expect payment at the start of each month rather than collecting it after the tenant has used the flat for a month.

Payments are made at the conclusion of each period in traditional annuities. When annuities are due, they are paid at the start of the period. The entire worth of payments at a certain moment in time is the future value of an annuity. The present value is the amount of money needed right now to make those future payments.

provide the explanation breakeven points and the lack of explanation of the process breakeven

provide the explanation step by step all estimates fixed costs including equipment, rent, insurance

calculates the breakeven point and identifies required sales revenue to reach breakeven – Your reasoning is sound, well done but I found some weakness in your explanation and I have attached my support how you can improve

How you do breakeven analysis with all steps and components:

Part 1: Determining Costs and Prices

Part 2: Calculating Contribution Margin and Break-Even Point

Part 3: Calculating Profits and Losses

See this web for more information and how you should develop this part of competence: How to Do Break Even Analysis: 9 Steps (with Pictures) – wikiHow

The pro forma income statement is based on the most recent income statement of the business, which is usually the financial statements of the last period.

Calculations

0 Starting Amount retiring employees after 10 years

10 # of years 20 year longevity

10,000.00 Monthly

8% rate of return compounded annually

Total Invesment Amount $ 1,200,000.00

0.463193 Present Value of $1

6.710081 Present Value of an Annuity of $1

$805,209.77 PV Rate of 8% with 10,000 paid monthly for 10 years)

$1,738,387.50 FV Rate of 8% with 10,000 paid monthly for 10 years)

$ 1,200,000.00 Principal

538387.5 Interest

Monthly Payment Amount for 5 management team members

PV (Present Value) $805,209.77

N (Number of Periods) 10

I/Y (Interest Rate) 8

PMT (Periodic Deposit) $120,000.00

Starting Amount $0.00

Total Periodic Deposits $1,200,000.00

Total Interest $538,387.50

$347,677.50 Total payment allowed per person

$11,589.25 Total payment per person per year if taken over 30 years

$965.77 Total payment/month to each person if taken over 30 years

$1,738,387.50 Future value back into if 965.77/mo is paid to 5 people each month for 30 years