Uncertainty of cash flows, Financial Accounting

Assignment Help:

 Individuals commonly prefer possession of cash immediately or in the present moment quite than the same amount at any time in the future. Such time preference is fundamentally due to the subsequent reasons:   

(a) Uncertainty of cash flows

(b) Preference for current consumption

(c) Availability of investment opportunities.

In matter of an investor opts to obtain cash in future she/he would demand a risk premium over and above the risk free rate when compensation for time to account for the improbability of cash flows. Discounting and compounding are techniques to support the comparison of cash flows going on at various time periods. In compounding future value of cash flows at a specified interest rate at the end of a specified period of time are cash flows at a specified interest rate at the starting of a specified period of time are determined. An annuity is a series of periodic cash flows of equivalent amount. Perpetuity is an annuity of infinite duration.


Related Discussions:- Uncertainty of cash flows

Re-order period - standard eoq model, The standard EOQ model supposes that ...

The standard EOQ model supposes that materials can be procured immediately and thus implies that the firm may place an order for replenishment as the inventory level drops to zero.

The american institute of cpas'' (aicpa), Describe:-1. Compare the American...

Describe:-1. Compare the American Institute of CPAs' (AICPA) Statements on Tax Standards (SSTS) and the Treasury Department Circular 230 rules to practice before the Internal Reven

Rules of intestacy-one surviving spouse, The intestate leaves one surviving...

The intestate leaves one surviving spouse, but no child or children The surviving spouse is entitled to: 1. The personal and household effects of the deceased absolutely: "per

Risk and return - issue of debt, Q. Risk and Return - issue of debt? Ra...

Q. Risk and Return - issue of debt? Raising debt finance will raise the gearing and the financial risk of the company while raising equity finance will lower gearing and financ

What do you mean by depreciation, Q. What do you mean by depreciation? What...

Q. What do you mean by depreciation? What are the causes for depreciation? Explain the two methods of depreciation. Depreciation means a fall in the quality, quantity or value o

Recording and reporting Equity, Ask qCamp Corp had the following balances i...

Ask qCamp Corp had the following balances in its stockholders'''' equity at jan 1: Common stock, $2, par value, 450,000 shares issued $900,000 Additional pd in capial 1,200,000 Ret

Treatment of cash flow - gaap & fasb, The appropriate treatment of Cash flo...

The appropriate treatment of Cash flow in respect of the following items as per US GAAP & FASB - (230-10)  1. Receipt of Insurance settlement proceeds of $2 mill. From an intern

Calculate the return on investments based on cash flow, This project allows...

This project allows you to think critically and apply decision-making management techniques. In this project,  you need to solve a bond portfolio problem, a diversified portfolio p

Calculate income (or loss) for 2012, A lawn care company started business o...

A lawn care company started business on January 1, 2012. The company billed clients $105,000 for lawn care services completed in 2012. By December 31, the company had received $84,

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