Financial Management
Present Value with Ordinary Perpetuity The word perpetuity is an annuity in which the cash flows continue forever. The ordinary cash flows occur at the end of each period. Time Line Question If the market interest rate is 11 percent, a consol with a yearly interest payment of $50. What is the current price of consol? Solution PV=C/r=$50/0.11=$455 So, price of consol
Continue reading Present Value with Even Cash Flows- Annuity Due Present value with even cash flows or annuity will be deposited or invested today with appropriate discount rate, and after that different even cash flows or annuity will be received during more than one period. The cash flows due occur at the beginning of the each period. Time Line Which: PVAD: present value annuity
Continue reading Present Value with Even Cash Flows- Ordinary Annuity Present value with even cash flows or annuity will be deposited or invested today with appropriate discount rate, and after that different even cash flows or annuity will be received during more than one period. The ordinary cash flows occur at the end of each period. Which: PVA: present value of ordinary annuity PVAF(r,t)=
Continue reading Present Value with Uneven Cash Flows-Present Value Due Present value with uneven cash flows will be deposited or invested today with appropriate discount rate, and after that different uneven cash flows will be received during more than one period. There are often four parts to equation (time value of money for multiple cash flows): the present value (PV), the future
Continue reading Present Value with Uneven Cash Flows-Ordinary Present Value Present value with uneven cash flows will be deposited or invested today with appropriate discount rate, and after that different uneven cash flows will be received during more than one period. There are often four parts to equation (time value of money for multiple cash flows): the present value (PV), the future
Continue reading Future Value with Even Cash Flows- Annuity Due Future value with even cash flows will be received from the same cash flows which are deposited or invested with appropriate discount rate during more than one period. The cash flows due occur at the beginning of the each period. Time Line Question Mr. Sok has salary of $1,000, he always remain
Continue reading Future Value with Even Cash Flows- Ordinary Annuity Future value with even cash flows will be received from the same cash flows which are deposited or invested with appropriate discount rate during more than one period. The ordinary cash flows occur at the end of each period. Time Line Question 1 To illustrate the two different ways of calculating future
Continue reading Future Value with Uneven Cash Flows – Future value due Future value with uneven cash flows will be received from different uneven cash flows which are deposited or invested with appropriate discount rate during more than one period. The cash flows due occur at the beginning of the each period. Time Line Question Miss. Muy Ny lends her friend monthly
Continue reading Future Value with Uneven Cash Flows – Ordinary future value Future value with uneven cash flows will be received from different uneven cash flows which are deposited or invested with appropriate discount rate during more than one period. The ordinary cash flows occur at the end of each period. Time Line FV(t)= C1*(1+r)t-1 + C2*(1+r)t-2 + C3*(1+r)t-3 + C4*(1+r)t-4 +
Continue reading Present Value of Single Cash Flow for Multiple Periods with Multiple Interest Rates Present Value with a Single Cash Flow: Present value (PV) is the current value of a single future cash flow discounted at the appropriate discount rate. Time value of money for a single cash flow is a cash inflow or outflow that investors or lenders received from or
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