Application of concept of tvm, Financial Management

Assignment Help:

Q. Application of concept of TVM

Sometime the financial manager has to deal with the varying situation of the decision making where the concept of TVM needs to be applied in the one form or the other However. It may be noted the proper understanding of the cash flows selection o0f the appropriate discounting compounding technique and Appling the correct are some of the prerequisites of an appropriate decision based on TVM. Practice and experience, both are required for the purpose use of the technique of TVM. The following are the sum of application of the concept of the TVM.

1) finding out the implicit rate of the interest: several financial institution have issued the deep discount bond (DDB) where the investor is required to pay a specific amount per bond at the time of the of issue and receive a much a large amount at the end of the a specific period the rate of interest is not given the technique of the TVM can be applied to find out the implicit rate of interest applicable to DDBs.

2) Finding out the number of period: sometime one may be interested to find out the time over the period which a certain amount will grow at the given rate of interest to a certain value. In this case the value can be ascertained by solving the followings equation

FV= PV (1+r) n


Related Discussions:- Application of concept of tvm

What is the function of dividend policy decision, Q. What is the function o...

Q. What is the function of Dividend policy decision? Dividend policy decision: the third major decision of the financial management of the decision related to the dividend poli

Define double-entry bookkeeping, Q. Define Double-Entry Bookkeeping? Do...

Q. Define Double-Entry Bookkeeping? Double-Entry Bookkeeping - Method of recording financial transactions in that every transaction is entered in two or more accounts and inclu

Debt financing in capital structure, Net Income approach says that a raise ...

Net Income approach says that a raise in the proportion of debt financing in capital structure results in an increase in the proportion of a cheaper source of funds. This in turn r

Sources of return, When an investor invests in fixed income sec...

When an investor invests in fixed income securities, he receives returns from one or more of the following sources: Coupon Interest payment.

Describe the concept of block of assets, Describe the Concept of Block of A...

Describe the Concept of Block of Assets? (a) Comment on the techniques of Risk Analysis commonly employed in Capital Budgeting. (b) Define clearly the concept of block of as

Claim for refund, Claim for Refund - A refund isn't automatically mailed if...

Claim for Refund - A refund isn't automatically mailed if one is due. A taxpayer whether individual orbusiness, should file a request on a form. It should also be filed within the

Evaluate the extent to which the balanced scorecard, Evaluate the extent to...

Evaluate the extent to which the Balanced Scorecard: The Balanced Scorecard has been described as an effective measurement system which enables managers of an organisation to

Explain traditional method of measurement, Q. Explain Traditional Method of...

Q. Explain Traditional Method of Measurement? Computation of yield to measure a financial asset's return is the simplest and oldest technique of measurement. Yield can be find

Calculate npv-irr - mirr - payback and discounted payback, Calculate NPV-IR...

Calculate NPV-IRR - MIRR - payback and discounted payback: 1-      Define and explain as well as you can of the following: a-      Goals and objectives of the Corporate Fir

Why are trend analysis and industry comparison, Why are trend analysis and ...

Why are trend analysis and industry comparison important to financial ratio analysis? Trend analysis assists financial analysts and managers see whether a company's current fin

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd