What a future stream of cash was worth as a lump sum

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Say that you were promised an amount of money and that it was worth K 10,000 now. You are given the option of receiving it in 5 years into the future. You know that you could invest it now a current rate of interest of 10 per cent per annum. If you waited for 5 years the amount that you would receive would be less at K 6,209.21.

Question 1: The same process is involved in investment analysis. To get an idea of what a future stream of cash was worth as a lump sum today you would have to calculate its Net Present Value.

Reference no: EM132539507

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