Discounting technique for calculating time value of money, Financial Management

Assignment Help:

DISCOUNTING TECHNIQUE is also called present value technique. It is the process of calculating the present value of cash flows.  Discounting is determining the present value of a future amount. Present value is the current value of a future amount.  That is in discounting; the present value of cash flows at a specified interest rate at the beginning of a specified period of time is calculated.  This is the most essential concept in financial decision making.  The present value (P) of a lump sum (F) occurring at the end of n period at i rate of interest is given by the equation

1662_discounting technique.png

The present value factor can be found out by referring to the present value tables.

 


Related Discussions:- Discounting technique for calculating time value of money

risk/return profile of the convertible security, Let us consider thr...

Let us consider three scenarios of changes in stock prices and look into the risk return profile of the convertible security. Let us assume that the stock prices

Operating cycle, how to write a vegetation operating cycle

how to write a vegetation operating cycle

Explain main drivers for changing to ipsas, Question: PART A With th...

Question: PART A With the view to modernise its accounting system Government is considering adopting International Public Sector Accounting Standards (IPSAS) so as to maxim

Create a report that fully explains both directors views, The Directors of ...

The Directors of Rohan Plc are discussing the importance of the dividend policy on the market value of their firm. The Chairman considers that the dividend is important and does a

Define comparative advantage related to currency swap market, How does the ...

How does the theory of comparative advantage relate to the currency swap market? Answer:  Name recognition is very important in the international bond market. With no it, even a

How industrial company inflate the value of its inventory, How can an indus...

How can an industrial company inflate the value of its inventory so as to decrease net income and the taxes is has to pay that year? If a company increases the value of its inv

Explain payback period of CHROMEX PLC, CHROMEX PLC Payback period ...

CHROMEX PLC Payback period Payback period must be based on cash flows that is the cash generated from operations and the capital invested by Chromex. Profit is different f

Define the tactics of shareholders used after the bid, After the bid Ta...

After the bid Tactics can be undertaken by directors to ensure that their shareholders don't accept the bid, if that is what they desire. Reject Share

Describe market value weights, Q. Describe Market Value Weights? Market...

Q. Describe Market Value Weights? Market Value Weights: - As per market worth scheme of weighting the weights to dissimilar sources of finance are assigned on the basis of thei

Aeromag, Our geologist, Rebecca Paulka, has estimated from the earlier expl...

Our geologist, Rebecca Paulka, has estimated from the earlier exploration that the Malian prospects have a 30% likelihood of containing economic quantities of uranium ore, the Nige

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