| Course | GF520 Corporate Finance |
|---|---|
| Unit | Unit 2 |
| Paper type | Time value problem set |
| Length | About 990 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Finance |
| Updated | October 2026 |
Free sample paper for GF520 Unit 2
Draw the Timeline First: A Unit 2 Time Value Problem Set in Eight Cash Flow Shapes
[Student Name]
Purdue University Global
GF520: Corporate Finance
Unit 2 Time Value Problem Set
[Instructor Name]
[Date]
All amounts, rates and the project in Problem 8 are illustrative; the textbooks cited are real.
Layout of the Eight Problems
All eight share five steps: the timeline, the formula chosen because of the timeline's shape, the substitution, the result and a line on what the result means. Choosing the formula from the shape of the cash flows, rather than from the wording of the question, prevents the most common errors in this unit, such as treating a monthly stream as annual or discounting a perpetuity as if it ended (Ross et al., 2022).
Single Sums
Problem 1: present value of one future amount. Timeline: one cash flow of $50,000 at the end of year 6; discount rate 7 percent. Formula: divide the $50,000 by the growth factor, 1.07 compounded over six years. Substitution: 1.07 to the sixth power is 1.500730, and $50,000 divided by 1.500730 gives the result. Result: $33,317.11. Meaning: a promise of $50,000 in six years is worth about two thirds of its face value today, so a buyer offering more than $33,317 for it is accepting less than 7 percent.
Problem 2: future value of one present amount. Timeline: $20,000 today, held ten years at 5.5 percent compounded annually. Formula: multiply the deposit by 1.055 compounded over ten years. Substitution: 1.055 to the tenth power is 1.708144. Result: $34,162.89. Meaning: compounding adds about 71 percent over a decade, of which only 55 percent would come from simple interest; the extra comes from earning interest on interest.
Level Streams
Problem 3: present value of an annual annuity. Timeline: $12,000 at the end of each of eight years; rate 6 percent. Formula: payment times the annuity factor, one minus one over one plus the rate to the eighth, all divided by the rate. Substitution: the factor is 6.209794. Result: $74,517.53. Meaning: eight payments totaling $96,000 are worth about $74,500 today, the most a lender charging 6 percent would advance against them.
Problem 4: future value of monthly saving. Timeline: $400 at the end of each month for twenty-five years, 300 payments, at 7 percent a year compounded monthly. Formula: payment times one plus the monthly rate to the 300th power minus one, divided by the monthly rate. Substitution: the monthly rate is 0.07 divided by 12, or 0.0058333. Result: $324,028.68. Meaning: contributions of $120,000 grow to about $324,000, so nearly two thirds of the ending balance is investment return rather than money put in.
Rate Conversion
Problem 5: effective annual rate. Timeline: a loan quoted at 8 percent a year, compounded monthly. Formula: the effective rate equals one plus the quoted rate divided by twelve, raised to the twelfth power, minus one. Substitution: 1.0066667 to the twelfth power is 1.0830. Result: 8.30 percent. Meaning: two quotes of 8 percent are not equal if one compounds monthly and the other annually; the monthly loan costs about 0.30 points more each year.
Loans
Problem 6: payment and interest on an amortizing loan. Timeline: $250,000 borrowed today, repaid in sixty equal monthly payments at 6.5 percent a year. Formula: the level payment that makes sixty discounted installments add back to the $250,000 borrowed, found by multiplying the principal by the monthly rate and dividing by one less the sixty-month discount factor. Substitution: the monthly rate is 0.0054167. Result: a payment of $4,891.54; total payments of $293,492.22, of which $43,492.22 is interest. Meaning: interest is front-loaded, so in the first month about $1,354 of the payment is interest and the rest repays principal; the split reverses by the final year.
Growing Streams
Problem 7: share value as a growing perpetuity. Timeline: a dividend of $2.10 one year from now, growing 3 percent a year forever; required return 9 percent. Formula: the coming dividend over the spread between the 9 percent required return and 3 percent growth. Substitution: $2.10 divided by 0.06. Result: $35.00. Meaning: the price is very sensitive to the gap between return and growth; if growth were 4 percent instead of 3, the same dividend would support a price of $42.00, which is why valuation texts warn against growth assumptions that approach the discount rate (Damodaran, 2012).
Uneven Streams
Problem 8: net present value of a project. Timeline: an outlay of $180,000 today, then inflows of $50,000, $60,000, $65,000 and $55,000 at the ends of years 1 to 4; rate 8 percent. Formula: the sum of each inflow discounted at 8 percent, minus the outlay. Substitution: the discounted inflows are $46,296.30, $51,440.33, $51,599.10 and $40,426.64, totaling $189,762.36. Result: a net present value of $9,762.36. Meaning: the project returns more than 8 percent, in fact about 10.4 percent, so at an 8 percent cost of capital it adds about $9,800 of value.
The eight problems use five formulas, but every one of them moves money along a timeline at a stated rate, so the timeline, not the formula, is what decides whether an answer is right.
Checking the Answers
Each result was checked a second way. In Problem 1, growing $33,317.11 at 7 percent for six years returns $50,000. In Problem 3, the present value is below the $96,000 total, as it must be at any positive rate. In Problem 6, the last payment's interest falls to about $26, consistent with a balance near zero. In Problem 8, discounting at the 10.4 percent internal rate gives a net present value of approximately zero. Financial calculators and spreadsheet functions were used to confirm each figure, but the formulas are shown so the method can be graded (Brealey et al., 2023).
Conventions
Payments fall at the end of each period unless stated. Monthly problems use the annual rate divided by twelve. Intermediate factors are carried to six decimals and only final answers are rounded to the cent.
References
Brealey, R. A., Myers, S. C., & Allen, F. (2023). Principles of corporate finance (14th ed.). McGraw Hill.
Damodaran, A. (2012). Investment valuation: Tools and techniques for determining the value of any asset (3rd ed.). Wiley.
Ross, S. A., Westerfield, R. W., Jaffe, J., & Jordan, B. D. (2022). Corporate finance (13th ed.). McGraw Hill.
GF520 Unit 2 instructions, in plain terms
Unit 2 of GF520 reviews the time value of money through a set of problems. For each one, draw or describe the timeline first, showing when every cash flow occurs, and let that shape decide which formula applies. Next comes the equation, the numbers placed into it and the answer with its units. Add a sentence explaining what the answer means for a borrower, lender or investor, since the course treats these figures as inputs to decisions. Cover single amounts, level annuities, monthly compounding, effective rates, loan amortization, growing perpetuities and uneven streams if your set includes them. Check each answer by a second route where one exists. State your conventions, such as end-of-period payments and when rounding happens. Calculators and spreadsheets are usually allowed, but the method should still be visible. Cite the textbook in APA 7.
Inside the GF520 Unit 2 example
Every problem in the sample runs through the same five steps, and the problems are grouped by the shape of their cash flows: single sums, level streams, a rate conversion, a loan, a growing stream and an uneven stream. Problem 1 notes that a buyer paying more than $33,317 accepts less than 7 percent, and Problem 2 separates compound growth from simple interest. Problem 4 shows that nearly two thirds of the ending balance is return rather than deposits, while Problem 6 splits the first payment into about $1,354 of interest and the rest principal. Problem 7 warns, citing Damodaran, that a growth rate near the discount rate inflates value. Problem 8 lists each discounted inflow. The highlighted sentence says the timeline, not the formula, decides correctness, and a checking section reverses or bounds every answer before a conventions note closes the set.
Reading the GF520 Unit 2 grading rubric
In a GF520 problem set, points follow correct answers reached by methods the grader can see. A result without its formula and substitution usually earns partial credit, while a slip in arithmetic with sound working keeps most of the points. The timeline matters because it shows the student placed each payment at the right period, which is where most errors begin. Meaning lines are graded as part of the answer in this MS in Finance course, since the point is to use these numbers in decisions. Consistent conventions, especially monthly against annual compounding, earn credit for care. A checking step is often what separates strong sets from adequate ones. Neat layout and an APA 7 entry for the textbook complete the scoring.
GF520 Unit 2 help: mistakes that cost points
Most lost points in GF520 Unit 2 come from timing: treating a payment at the start of a period as if it came at the end, or counting periods incorrectly on a monthly problem. Students also mix annual and monthly rates in one formula. Effective and quoted rates get confused, so two loans are compared on the wrong basis. Answers appear with no working because a spreadsheet produced them. Meaning lines are skipped or restate the number in words. In growing perpetuities, this year's dividend is used where next year's belongs. Whatever figures your own set uses, keep the same order: timeline, formula from its shape, substitution, result, meaning and a check.
Get a GF520 Unit 2 example written to your instructions
Attach the GF520 Unit 2 problems exactly as assigned, plus the rubric and any instruction about showing work by hand or by spreadsheet. Each one is solved on its own timeline with the equation, the substituted values and a check line beneath. There is no fee for the first custom sample, which normally returns within 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
More GF520 papers and MS in Finance samples
- GF520 Unit 1: Funding Choice Discussion Post
- GF520 Unit 3: Cost of Capital Computation
- GF520 Unit 4: Capital Budgeting Analysis
- GF520 Unit 5: Project Appraisal Memo
- GF520 Unit 6: Seminar Reflection
- GF520 Unit 7: Capital Structure Case Study
- GF520 Unit 8: Dividend Policy Brief
- GF520 Unit 9: Working Capital Plan
- GF520 Unit 10: Corporate Finance Report
- GF510 Unit 2: Pool Maker Risk Identification Memo
- GF500 Unit 2: Flow of Funds Brief on a 401(k) Dollar
GF520 Unit 2 questions, answered
What separates an ordinary annuity from an annuity due?
Timing. An ordinary annuity pays at the end of each period and an annuity due pays at the start, so every payment in the due version earns one extra period of interest. Rent and lease payments usually fall at the start, loan payments at the end. The sample marks each problem's convention on its timeline, and the annuity due answer equals the ordinary result multiplied by one plus the rate.
Why draw a timeline for a simple problem?
Because most time value errors are counting errors, not arithmetic ones. Placing each cash flow at its period shows whether a payment falls at time zero or time one and how many periods separate it from today. Graders can also follow a timeline in seconds, so when a figure is off they can often award method credit, which a bare answer cannot receive.
My problems use different numbers. Does that matter?
Not to the method. The rate, amount and number of periods change, but the sample's sequence does not: flows placed, type named, equation written, values substituted, answer checked. The custom version is solved on the numbers your instructor assigned rather than the illustrative figures shown here, and it follows whatever convention your section specifies for compounding, payment timing and rounding.
Where can I find a free GF520 Unit 2 sample paper?
This page holds a full GF520 Unit 2 time value problem set, eight problems from single sums to an uneven project stream, each with a timeline, formula, result, meaning line and APA 7 references.
Why is 8 percent compounded monthly worth 8.30 percent?
Interest is added every month and then earns interest itself. Twelve compounding periods at two-thirds of a percent each grow a dollar to about $1.083 over a year, an effective rate of 8.30 percent.