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

Setting of optimal cash balance, Setting of Optimal Cash Balance Cash ...

Setting of Optimal Cash Balance Cash is often identified like a non-earning asset since holding cash quite than a revenue-generating asset includes a cost in form of foregone

Shareholders - measuring business performance, Shareholders - Measuring Bus...

Shareholders - Measuring Business Performance Shareholders Actual owners are interested in the company's both short and long term survival.  For this cause they will need

System intergration, system integration and infrastructure development is t...

system integration and infrastructure development is the

Operating cycle, Discuss the applicability of an operating cycle in the veg...

Discuss the applicability of an operating cycle in the vegetable growing business

#title. EM13545112., Define benefit plan for the employee participants

Define benefit plan for the employee participants

Financial instruments in money market, Financial Instruments in Money Marke...

Financial Instruments in Money Market or Discount Markets Financial Instruments in Money market involve as: 1. Commercial paper 2. Bills of exchange 3. Treasury bills

Management of inventories, Management of Inventories Manufacturing fir...

Management of Inventories Manufacturing firms contains three major kinds of inventories as: Work-in-progress Finished goods inventory Raw materials The firm

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

Present value of an annuity, Determine the Present Value of An Annuity and ...

Determine the Present Value of An Annuity and give explanation of this topic?????

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