Discounting technique for calculating time value of money, Financial Management

DISCOUNTING TECHNIQUE is also called present value technique. It is the process of calculating the present value of cash flows.  Discounting is determining the present value of a future amount. Present value is the current value of a future amount.  That is in discounting; the present value of cash flows at a specified interest rate at the beginning of a specified period of time is calculated.  This is the most essential concept in financial decision making.  The present value (P) of a lump sum (F) occurring at the end of n period at i rate of interest is given by the equation

1662_discounting technique.png

The present value factor can be found out by referring to the present value tables.

 

Posted Date: 10/15/2012 9:03:53 AM | Location : United States







Related Discussions:- Discounting technique for calculating time value of money, Assignment Help, Ask Question on Discounting technique for calculating time value of money, Get Answer, Expert's Help, Discounting technique for calculating time value of money Discussions

Write discussion on Discounting technique for calculating time value of money
Your posts are moderated
Related Questions
Rating Symbol Capacity for Timely Repayment Rating Symbol Capacity for Timely Repay

Purpose of Issue CDs benefit both issuers and investors. From the issuers (banks) point of view, CDs are issued foreseeing the advantages over conventional deposits. The motives

applicability of operating cycle in poultry

Calendar Studies These attempted to predict rates of return during a calendar year and examine if there is any particular observable pattern in the rates of return on the stock

Can you draw Capital asset pricing model with example and explain?????

Average of Relatives Method We have seen the construction of an index number using the aggregates method. In this section, we shall see the construction of an index using the

Explain about money markets by maturity of the securities. On the basis of the maturity of the securities traded, money markets can be introduced here: Money markets are financ

a)  What two legal documents should the couple ensure are up-to-date if they want a sound estate plan?  What would happen if either became incapacitated or died and didn't have any

What are the pros and cons of commercial paper relative to bank loans for a company seeking short-term financing? Commercial paper is generally a cheaper source of short-term f

I need a report on the topic Inventory Turnover Ratio. Can you please assist me for Inventory Turnover Ratio report for about 2500 words?