Explain present value of a series of cash flows, Financial Management

Assignment Help:

Q. Explain Present Value of a Series of Cash Flows?

Present Value of a Series of Cash Flows: - In a business circumstances it is very natural that returns received by a firm are spread over a number of years. To approximation the present value of future series of returns the present value of each expected inflow will be calculated.

240_Explain Present Value of a Series of Cash Flows.png

Where PV = total of individual present values of every cash flow

C1, C2, Cn = Cash flows after periods 1,2------n

i= Discounting Rate

Instance: - Given the time importance of money as 10% (that is the discounting factor). You are necessary to find out the present value of future cash inflows that will be received over next four years.

Year

Cash Flows

1

2

3

4

1000

2000

3000

4000

1925_Explain Present Value of a Series of Cash Flows2.png

= 909 + 1652 + 2253 + 2732

= Rs. 7546


Related Discussions:- Explain present value of a series of cash flows

Debt finance, Ask queswtion #Minimum 100 words accepted# what are the chara...

Ask queswtion #Minimum 100 words accepted# what are the characteristics of debt finance? What are the similarities and differences between debt finance and ordinary share capital

Explain the risk of the capital asset pricing model, Discuss risk from the ...

Discuss risk from the perspective of the Capital Asset Pricing Model (CAPM). The Capital Asset Pricing Model, or also known as CAPM, can be employed to calculate the suitable req

State the major decision of financial management, State the major decision ...

State the major decision of financial management The major decision of financial management is the decision relating to dividend policy. The dividend must be analysed in relat

Analysis of the capacity to pay, In addition to management quality, a...

In addition to management quality, an assessment of the financial capacity of a company should also include an evaluation of trends, regulatory environment, basic

Analyse the company capital structure, 1. Analyse the company's capital str...

1. Analyse the company's capital structure and critically assess different types of financing options available to the company. Calculate the cost of these different types of finan

Explain the concept of newsworthiness in the field of pr, Question 1: (...

Question 1: (a). A big multinational company wishes to employ a PR manager for all its PR activities. What according to you would be the advantages and disadvantages of having

What do you signify by investment decisions, Q. What do you signify by Inve...

Q. What do you signify by Investment Decisions? Investment Decision: - The most significant function of financial management isn't only the procurement of external funds for th

What is inherent risk, What is Inherent risk Susceptibility  of  an  ac...

What is Inherent risk Susceptibility  of  an  account  balance  or  class  of  transactions  to  material  misstatement either  individually  or  when  aggregated  with misstat

Statement of total comprehensive income for the year, At 31 July 2010 this ...

At 31 July 2010 this instrument meets the definition of a derivative: Small or no initial investment. Its value is dependent on an underlying economic item; exchange ra

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