Present Value

FIN301 - Principles of Finance Dinell Sveen Module 2 Case Paper June 11, 2012 abstractionist In this case paper it volition talk of in the root part is how to view array honor and what tactical maneuver apprize shows for a company. The second part of the paper will discuss expectant Budgeting and what companies look for when look at cipher outcomes. report Words: dedicate Value, Net Present Value, Capital Budgets, cut rates, and cost of capital Part I: Present Value is a great tool in pay when trying to calculate the express day value of an sum that is received at a future participation (Present Value). The root of the equation is that at that place is a time value of specie, which means in that location is a concept that an amount of money today will be deserving more in a future date (Present Value). This formula has a large-minded range of uses and can be applied to areas of finance whether it is corporate, banking companying or in vestment (Present Value). The formula for present value is: PV = FV / (1 + r)Y Question A: For interview A the caput stated that the bank identify will be expense $15,000.00 in one year. The recreate rate (discount rate) that the bank 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 Question B: For question B it stated that there were two bank accounts, count on A and depict B. Account A will be worth $6,500.00 in o ne year. Account B will be worth $12,600.00 ! in two years. Both accounts consume 6% interest. What is the present value of severally 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 tap is believed to have three years worth of flamboyant deposit. here is how much income this gold mine is projected to come you each year for the next...If you want to get a effective essay, rove it on our website: BestEssayCheap.com

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