Show the present value of a single flow, Financial Management

Assignment Help:

Q. Show the Present Value of a Single Flow ?

Discounting or else Present Value of a Single Flow (Lump Sum):- We are able to determine the PV of a future cash flow using the formula:

PV = FV (1+i) n

Where FV = Future value of the preliminary flow in n years

PV= Present Value

i= Annual rate of interest

n = No. of years

Example: - Mr. X anticipate to have an amount of Rs. 1000 subsequent to one year what should be the amount he has to invest today if the bank if offering 10% interest rate?

PV = 1000 (1+.10) 1

PV = Rs. 909.09


Related Discussions:- Show the present value of a single flow

Profit center, Profit Center A separate unit or department within an or...

Profit Center A separate unit or department within an organization that is responsible for its own revenues, costs, and there profit. Profit center managers are commonly free t

Federal funds rate, Federal Funds Rate The interest rate that Amer...

Federal Funds Rate The interest rate that American banks that have funds in excess of the needs dictated by the Federal Reserve use to make overnight loans to banks whose

Credit card receivable-backed securities, For holders of CARDS,...

For holders of CARDS, the interest is paid monthly and the principal is not amortized. The principal payments made by credit card borrowers are

Analysing performance through ratios, Analysing performance through ratios ...

Analysing performance through ratios Ratios are an effective way of analysing financial statements. A ratio is 2 figures compared to each other and can either be in absolute te

the use of a preauthorized check system, In general, what type of firm wou...

In general, what type of firm would benefit from the use of a preauthorized check system and what specific types of companies have successfully used this device to accelerate cash

Find the minimum annual savings, Baldwin Company is interested in buying a ...

Baldwin Company is interested in buying a new corporate jet for $6 million. It will depreciate the jet fully in 5 years and then sell it for $5 million. The jet will use $60,000 in

Interpretations of duration, Duration is often referred to as the app...

Duration is often referred to as the approximate percentage change in the price for a 1% change in rates. Now, we will see some other definitions or interpretatio

Rectification of errors, What is rectification of errors? List and explain ...

What is rectification of errors? List and explain the stages where the errors are deducted for rectification.

Bonds Valuation, Six years ago . the singleton company sold a 20 year bond ...

Six years ago . the singleton company sold a 20 year bond with a 14% annual coupon rate and a 9% call premium. today, singleton called the bonds. the bonds originally were sold at

Define measures that propose to prevent the recurrence, In an integrated wo...

In an integrated world financial market, a financial crisis in a country can be rapidly transmitted to other countries, causing a global crisis. What kind of measures would you pro

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