Present value of an annuity - dcf technique, Finance Basics

Assignment Help:

Present Value of an Annuity - DCF Technique

An individual investor may not necessarily acquire a lump sum after several years however rather obtain a constant periodic amount that is an annuity for specific number of years.  The current value of an annuity obtainable where the investor time preference is 10 percent equal to:

Pv (A) = A / (1+i)

I = time preference rate

As an example of 

Pv of 1/= to be obtained after 1 year if time preference rate is 10 percent.

1/ (1+0.1) = 0.909

After 2 years it will be: A / (1+i)2 = 1/(1.1)2 = 0.8264  

1st year    -        0.9090

2nd year   -        0.8264

3rd year    -        0.7513

4th year    -        0.6830

Total         -        3.1697


Related Discussions:- Present value of an annuity - dcf technique

Meaning of a sentence, on this sentence: "all have an interest in understan...

on this sentence: "all have an interest in understanding what drives trade" please explain what''s meaning of "what drives trade"?

Assignment , what are the difference between receipt and payment account an...

what are the difference between receipt and payment account and income and expenditure account ?.

OPTION, DEFINE THE TERM OPTION IN DETAIL?

DEFINE THE TERM OPTION IN DETAIL?

Forms of business organizations, Forms of Business Organizations The te...

Forms of Business Organizations The term business is wide in meaning. It includes all human activities made for the sake of earning profits through the process of production of

Shareholders - measuring business performance, Shareholders - Measuring Bus...

Shareholders - Measuring Business Performance Shareholders Actual owners are interested in the company's both short and long term survival.  For this cause they will need

Competitors and general public, Competitors and General Public - Measuring ...

Competitors and General Public - Measuring Business Performance Competitors These are interested in the company's presentation from the market share point of view and wi

Investment opportunity and capital structure, Investment Opportunity and Ca...

Investment Opportunity and Capital Structure Investment Opportunity Lack of suitable investment opportunities, that is so, by positive returns or N.P.V., may encourage a

Price earnings ratio, Price Earnings Ratio Price earnings (P/E) or rat...

Price Earnings Ratio Price earnings (P/E) or ratio =  Market price per share (MPS)/Earnings per share                                     OR    = Market value of equity /Ea

Work, A bond that has $1000 face value and a contract interest rate of 11.4...

A bond that has $1000 face value and a contract interest rate of 11.4%. The bonds have a current value of $1124 and will mature in 10 years. The firms marginal tax rate is 34%. The

I need help with tests, I need help with : an introduction to financial ma...

I need help with : an introduction to financial markets and institutions , 2 edition , brown, nesiba, burton

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd