Get My Homework Done|Homework Answers|Homework Help

1 / 4

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

http://allhomeworktutors.com/

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

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

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

### EXAMPLES

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
• 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 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/