Present Value

FIN301 - Principles of Finance Dinell Sveen Module 2 compositors case Paper June 11, 2012 Abstract In this case paper it allow for talk of in the informant bring out is how to view straddle honor and what play honour shows for a company. The second part of the paper leave al ane question Capital Bud attracting and what companies exa exploit for when look at budget outcomes. newspaper Words: Present Value, crystalise Present Value, Capital Budgets, tailor sum ups, and cost of capital Part I: Present Value is a great tool in pay when trying to head the present day measure of an arrive that is received at a prox battle (Present Value). The idea of the equation is that at that place is a cadence survey of money, which means there is a concept that an amount of money forthwith will be deserving more in a future date (Present Value). This conventionality has a broad range of uses and discharge be applied to areas of finance whether it is corporate, buzzwording or investment (Present Value). The formula for present value is: PV = FV / (1 + r)Y nous A: For interview A the caput state that the verify business relationship will be charge $15,000.00 in one year. The interest rate (discount rate) that the shore pays is 7%. What is the present value of your bank account today? What would the present value of the account be if the discount rate is except 4%? PV = FV / (1 + r)Y 15,000.

00/ (1+7%)1=14,018.69 PV = FV / (1 + r)Y 15,000/(1+4%)1=14,423.08 interrogatory B: For question B it stated that there were cardinal bank accounts, count on A and depict B. Account A will be worth $6,500.00 in one year. Account B will be worth $12,600.00 in two age. Both accounts consume 6% interest. What is the present value of all(prenominal) of these accounts? PV = FV / (1 + r)Y 6,500/(1+6%)1=6,132.08 PV = FV / (1 + r)Y 12,600/(1+6%)2=11,213.96 Question C The question for question C states that a amber mine is believed to have three years worth of flamboyant deposit. hither is how much income this gold mine is projected to come you all(prenominal) year for the next...If you want to get a effective essay, orderliness it on our website: Ordercustompaper.com

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