Illustrate the concept of present value, Managerial Economics

Assignment Help:

Illustrate the concept of present value.

The Concept of Present Value:

While someone borrows money for a year, there the interest rate is the price, computed as a percentage of the amount borrowed, which charged by the lender.

The interest rate can be utilized to compare the value of a dollar realized nowadays along with the value of a dollar realized later, since this correctly measures the cost of delaying a dollar of benefit as well as the benefit of delaying a dollar of cost.

The present value of one dollar realized one year by currently is equal to $1/(1 + r): that is the amount of money you should lend out today sequentially to have $1 into one year. This is the value to you now of $1 realized one year by currently. The present value formula is equivalent to $1/(1 + r)N.

Whether the net present value of a project is present value of present and future benefits minus the current value of present and future costs.


Related Discussions:- Illustrate the concept of present value

Regressive tax, REGRESSIVE TAX A tax is said to be regressive when its...

REGRESSIVE TAX A tax is said to be regressive when its burden falls more heavily on the poor than on  the rich.  No civilized government imposes a tax like this.

Calculate the disk capacity and maximum data transfer rate, Consider a magn...

Consider a magnetic disk consisting of 16 heads and 400 cylinders. This disk is divided into four 100-cylinder zones with the cylinders in different zones containing 160, 200, 240,

Limits on the process of bank deposit creation, Limits on the process of ba...

Limits on the process of bank deposit creation On the demand side , there may be a lack of demand for loans, or at least of borrowers who are sufficiently credit worthy .

Loss at the point of equilibrium, Q. Loss at the point of equilibrium? ...

Q. Loss at the point of equilibrium? Losses: At the point of equilibrium i.e. E where MR = MC, firm produces OM amount of the output. To produce this output, firm incurs an a

Plot the demand schedule and draw the demand curve for the d, Plot the dema...

Plot the demand schedule and draw the demand curve for the data given for Marijuana in the caseabove.

What is the nature of commodity, Q. What is the Nature of Commodity ? T...

Q. What is the Nature of Commodity ? The nature of a commodity as well has an effect on the price elasticity of its demand. Commodities can be characterised ascomforts, luxurie

Write internal and external factors of business operation, Internal and Ex...

Internal and External factors of business operation External factors : A firm can't exercise any control over these factors. Thepolicies, plans and programmes of the firm m

Construction of the causal model - regression analysis, Q. Construction of ...

Q. Construction of the causal model - regression analysis? The construction of an explanatory model is a crucial step in the regression analysis. It should be defined with refe

Many dollars of change in consumption, Given a saving function of S = -25 +...

Given a saving function of S = -25 + .2Yd, a $10 billion enhance in government spending will bring about how many dollars of change in consumption?

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