Present value of an annuity - dcf technique, Finance Basics

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

Posted Date: 1/31/2013 12:34:35 AM | Location : United States







Related Discussions:- Present value of an annuity - dcf technique, Assignment Help, Ask Question on Present value of an annuity - dcf technique, Get Answer, Expert's Help, Present value of an annuity - dcf technique Discussions

Write discussion on Present value of an annuity - dcf technique
Your posts are moderated
Related Questions
Suggestion Regarding Credit Limit. Should It Be Approved Or Not, W, Finance

Conduct research and explain the companies, their operations, locations, markets, and lines of business. Collect financial statements for the past three years, fiscal or calendar .

what are the modern methods of evaluating capital projects? how they different from old methods?


Management of Account Receivable In order to keep current customers and attract new ones, most firms find it necessary to offer credit. Accounts receivable represents the exte

Partnership Deeds This is an important document which governs the members in partnership firm. It covers among other things the following points:      i. The name, location,

Important Points for Capital Market Authority Apart from the above roles, CMA can assume the given steps to encourage progress of stock exchanges in US or other countries.

Merchant Banks - Banking Institution Merchant Banks begun life as merchants and begun to control in financial firms, during the 19 th Century . The merchant banks act like a

What do you mean listing of securities? Explain. Listing of Securities: Listing means admission of the securities to dealings on a recognized stock exchange. Securities of an

should be provied on a centralised or a decentralised basic?