Explain present value of a series of cash flows, Financial Management

Assignment Help:

Q. Explain Present Value of a Series of Cash Flows?

Present Value of a Series of Cash Flows: - In a business circumstances it is very natural that returns received by a firm are spread over a number of years. To approximation the present value of future series of returns the present value of each expected inflow will be calculated.

240_Explain Present Value of a Series of Cash Flows.png

Where PV = total of individual present values of every cash flow

C1, C2, Cn = Cash flows after periods 1,2------n

i= Discounting Rate

Instance: - Given the time importance of money as 10% (that is the discounting factor). You are necessary to find out the present value of future cash inflows that will be received over next four years.

Year

Cash Flows

1

2

3

4

1000

2000

3000

4000

1925_Explain Present Value of a Series of Cash Flows2.png

= 909 + 1652 + 2253 + 2732

= Rs. 7546


Related Discussions:- Explain present value of a series of cash flows

Domestic factors were important than international factor, Why do you think...

Why do you think the empirical studies as regards factors influencing equity returns mainly showed that domestic factors were more significant than international factors, and, seco

Gathering competitive intelligence information, K is a kitchen and bathroom...

K is a kitchen and bathroom design and installation company which currently has showrooms in one region only of Country T. The company has enjoyed considerable success since it was

Agency policy theorem, How might management try to solve the problems foun...

How might management try to solve the problems found in agency theorem

Calculate expected gain or loss from the forward hedging, 1. A company sold...

1. A company sold a super computer to an Institute in Germany on credit and invoiced DM 10 million payable in six months. Presently, the six-month forward exchange rate is $1.50/DM

List a few types of non-price rationing systems, List a few types of non-pr...

List a few types of non-price rationing systems. (a) Queuing. (b) Favored customers. (c) Rationing coupons.

The key stages of a typical procurement cycle, QUESTION 1 Discuss the r...

QUESTION 1 Discuss the role and contribution of the procurement function in an organisation. QUESTION 2 Discuss the main objectives of purchasing negotiations. Compare

Examine about the risk-based auditing, Examine about the Risk-based auditin...

Examine about the Risk-based auditing A risk based audit will be reviewing the risk management process and considering main risks of the organisation as a whole. Risk manage

Financial Analysis Management, I need this in the next 24 hours urgently. I...

I need this in the next 24 hours urgently. If you can accept this, you must be meeting the deadline with strictly no delays or full payment refund is needed

What is creative accounting, What is Creative accounting Creative accou...

What is Creative accounting Creative accounting (also termed as aggressive accounting or earnings management) distorts financial analysis of company accounts. Creative accounti

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