Present value of uneven periodic sum - dcf technique, Finance Basics

Assignment Help:

Present Value of Uneven Periodic Sum - DCF Technique

As in investment decisions it is very rare to acquire even periodic returns and in most cases a company will generate a stream of uneven cash inflows from a venture and so the current value of those types of uneven periodic sums is equivalent to as:

Pv = A1 / (1+k)1 + A2 / (1+K)2 +A3/(1+K)3 + ..... +AN / (1+K) N

Equation is as:

1899_Present Value of Uneven Periodic Sum - DCF Technique.png

Whereof:    At = Uneven cash inflows at time t

                   Pv = current value

                   K   =Cost of finance

A company contemplates to receive Shs.:

20,000 in year 1

18,000 in year 2

24,000 in year 3

Nil      in year 4

40,000 in year 5

Cost of this finance is 12percent

Required

Calculate present value of that finance

Solution

Pv = 30,000 (1+12)1 + 18,000 / (1+12)2 +24,000/(1+12)3 + 40,000 / (1.12)5

= 80,915.004


Related Discussions:- Present value of uneven periodic sum - dcf technique

Financial intermediaries, Financial Intermediaries These are instituti...

Financial Intermediaries These are institutions that link or mediate between the investors and savers: Some examples of financial intermediaries are as follow: 1. Comme

Asset management, Which of the following is not considered to be an investm...

Which of the following is not considered to be an investment objective

Merchant banks - banking institution, Merchant Banks - Banking Institution ...

Merchant Banks - Banking Institution Merchant Banks begun life as merchants and begun to control in financial firms, during the 19 th Century . The merchant banks act like a

Captive insurance, discuss the meaning and advantage of captive insurance

discuss the meaning and advantage of captive insurance

Important points for working capital cycle, Important points for Working Ca...

Important points for Working Capital Cycle A lengthy working capital cycle is a sign of poor management of debtors and stock reflecting low turnover of debtors and stock and l

Growth rates and hypothetically, Growth Rates Most ...

Growth Rates Most Recent Fiscal Year Fiscal Year (-1) Fiscal Year (-2) Fiscal Year (-3) Annu

Define the direct finance and indirect finance in markets, Define the direc...

Define the direct finance and indirect finance in markets. In direct finance, borrower-spenders borrow funds directly by lenders into the financial markets through selling them

Determine total expenditure, Determine the amount you would be willing to p...

Determine the amount you would be willing to pay for a $1,000 par value bond paying $80 interest each year (annual) and maturing in 12 years, assuming you wanted to earn a 9% rate

Goods and service tax-business activity statement, Asset: - An asset stand...

Asset: - An asset stands for an item of value owned and controlled by an organization which can generate revenue for the organization or can help in generating the organization re

What does beta measure and how is it interpreted, The Beta of several indus...

The Beta of several industry sectors is shown below. Industry                                                                                            Beta (β) Banks

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