Application of concept of tvm, Financial Management

Assignment Help:

Q. Application of concept of TVM

Sometime the financial manager has to deal with the varying situation of the decision making where the concept of TVM needs to be applied in the one form or the other However. It may be noted the proper understanding of the cash flows selection o0f the appropriate discounting compounding technique and Appling the correct are some of the prerequisites of an appropriate decision based on TVM. Practice and experience, both are required for the purpose use of the technique of TVM. The following are the sum of application of the concept of the TVM.

1) finding out the implicit rate of the interest: several financial institution have issued the deep discount bond (DDB) where the investor is required to pay a specific amount per bond at the time of the of issue and receive a much a large amount at the end of the a specific period the rate of interest is not given the technique of the TVM can be applied to find out the implicit rate of interest applicable to DDBs.

2) Finding out the number of period: sometime one may be interested to find out the time over the period which a certain amount will grow at the given rate of interest to a certain value. In this case the value can be ascertained by solving the followings equation

FV= PV (1+r) n


Related Discussions:- Application of concept of tvm

What is dependent care expenses, Q. What is Dependent Care Expenses? De...

Q. What is Dependent Care Expenses? Dependent Care Expenses - Qualified child care expenses would allow a taxpayer this computed credit against tax. Amounts can be found on the

Advanced financial management, QUESTION 1 [25 marks] Xelo Ltd, whose curren...

QUESTION 1 [25 marks] Xelo Ltd, whose current sales consist of fixed operating costs of R140 000 and variable operating costs equal to 22% of sales, has made the following two sale

Organization and management pattern of uti, Organization and Management Pat...

Organization and Management Pattern of UTI UTI has a full-time Chairman with an Executive Trustee reporting to him. The Executive Trustee looks after the Corporate Office, Zona

Capitalization ratios, Capitalization ratios are used for determining the e...

Capitalization ratios are used for determining the extent to which the corporation is trading on its equity, and the resulting financial leverage. These ratios

Bonds with embedded put options, Put option is the right of the inves...

Put option is the right of the investor which he may exercise on the date at the put price given in the indenture. Normally, put price is in par value. When yield rises

Operating cycle and financial management, discuss the applicability of oper...

discuss the applicability of operating cycle and any other financial management in poultry business in uganda

What is cost of capital, What is Cost of Capital Cost of Capital is the...

What is Cost of Capital Cost of Capital is the rate which should be earned in order to satisfy required rate of return of the firm's investors. It may also be defined as the ra

Types of t-bills, Types of T-Bills In the US markets, though there ar...

Types of T-Bills In the US markets, though there are many types of T-bills, they can be broadly classified into two types - regular-series bills and irregular-series bills.

Capital budgeting assignment, Assignment 2 Decision Tree Assessing Alterna...

Assignment 2 Decision Tree Assessing Alternatives in Capital Budgeting [see Bailes, J.C., and Nielsen, J.F. (2001, Winter). Using decision trees to manage capital budgets. Manag

No title, discuss the steps in the controlling process

discuss the steps in the controlling process

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