Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Here are several resources that talk about the time value of money and how to perform net present value calculations - EconEd, Study Finance, Discounted Cash Flow. Net present value is often used to inform investment decisions. To perform the calculation, you can follow the formulas as they are presented in the readings or you can simply multiplying the future sum by the appropriate discount factor using the Net Present Value Table.

Please perform the following kinds of calculations, and prepare a short report describing what you did, showing your figures, and the results that you obtained.

You may use an Excel spreadsheet in order to perform the necessary computations for this problem.

Suppose your bank account will be worth $4,200.00 in one year. The interest rate (discount rate) that the bank pays is 5%. What is the present value of your bank account today?
Suppose you have two bank accounts, one called Account A and another Account B. Account A will be worth $3,800.00 in one year. Account B will be worth $6,500.00 in two years. Both accounts earn 5% interest. What is the present value of each of these accounts? What is the combined present value of the two accounts?
Suppose you just inherited an oil well. This oil well is believed to have three years' worth of oil left before it dries up. Here is how much income this oil well is projected to bring you each year for the next three years:
Year 1: $125,000

Year 2: $258,000

Year 3: $310,000

Compute the present value of this stream of income using a discount rate of 7%. Remember, you are calculating the present value for a whole stream of income, i.e. the total value of receiving all three payments (how much you would pay right now to receive these three payments in the future). Your answer should be one number - the present value for this oil well at a 7% discount rate.

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M923879

Have any Question? 


Related Questions in Basic Finance

Part 11 prospective analysisforecast future financial

Part 1 1. Prospective Analysis Forecast future financial performance. Use the four valuation models outlined in class to produce an estimate of firm value, and compare to stock price. Perform sensitivity analysis and dis ...

1 what are the primary benefits from investing in real

1. What are the primary benefits from investing in real estate income property? 2. What factors would result in a property increasing in value over a holding period? 3. How do you think expense stops and CPI adjustments ...

Budget analysis needed asapi need a budget analysis

Budget analysis needed ASAP I need a budget analysis completed. I will provide the template and previous assignments needed to complete this project. I am on a time crunch and need this done ASAP. Using the workbooks and ...

Interpret the following statements about value at risk so

Interpret the following statements about Value at Risk so that they would be easily understood by a nontechnical corporate executive: a. VAR of $1.5 million, one week, probability = 0.01. b. VAR of $3.75 million, one yea ...

1 what is exchange-rate risk how can exchangerate risk be

1. What is exchange-rate risk? How can exchangerate risk be hedged using forward, futures, and options contracts? 2. How might an investor use forward, futures, and options contracts to speculate on the future value of a ...

Look at the formula for the present value of an annuity

Look at the formula for the present value of an annuity. What happens to its value as the number of periods increases? What distinguishes an annuity from a perpetuity? Why is there no future value of a perpetuity?

Answer both of the following questions in a 2-3 page word

Answer both of the following questions in a 2-3 page Word document: 1. To be adequately informed about the adequacy of a company's risk management, investors and creditors need information about strategies for holding de ...

1 which type of error do researchers usually regard as more

1. Which type of error do researchers usually regard as more serious? Why? 2. Explain what it means if a researcher sets the alpha level for a statistical test at .05. 3. What does it mean if the difference between two m ...

Define a shear joint define an axial shear joint define

Define a shear joint? Define an axial shear joint? Define faying surface? Define friction-type joint? Define bearing-type joint? Draw a graph illustrating the way a shear joint fails? Is bolt preload important in a shear ...

1 in terms of ipo investing what does it mean to flip a

1. In terms of IPO investing, what does it mean to "flip" a stock? According to the empirical results regarding short- and long-term returns that follow equity offerings, is flipping a wise investment strategy? 2. What m ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen