Examples
Download
1 / 4

Get My Homework Done|Homework Answers|Homework Help - PowerPoint PPT Presentation


  • 103 Views
  • Uploaded on

http://allhomeworktutors.com/

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Get My Homework Done|Homework Answers|Homework Help' - allhomeworktutors


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

Examples1
examples

  • Imagine you have purchased a stock at 2000 dollars and the expected returns for three years are as follows

    Year one =1,500

    Year two =1,300

    Year four =1,600

    The net present value of the stock would be calculated as follows assuming a discounting rate of 5%


Examples continued
Examples continued

  • NPV = PV of cash in flows-PV of cash outflows

  • PVIF=1/(1+K)^n

    = 1/(1+0.05)^1=0.9524

    =1/(1+0.05)^2=0.90702

    =1/(1+0.05)^3=0.8639

    THE NPV

    YEAR PVIF AMOUNT P.V.

    0 1 2,000 (2,000)

    1 0.9524 1,500 1,428.6

    2 0.90702 1,300 1,179.13

    3 0.8639 1,600 1,382.17

    NPV 1,990.00


Examples continued1
EXAMPLES CONTINUED

CALCULATE THE VALUE OF THE COST OF THE ABOVE STOCK IN THE NEXT THREE YEARS.

FVAt = PMT * {[(1+r)t –1]/r}

= 2,000*{[(1+0.05)^3-1]/0.05

=2,000*3.1525

=6,305=FUTURE VALUE ASSUMING IT SHALL BE PAID TODAY. http://allhomeworktutors.com/


ad