Multi-period compounding or else future value, Financial Management

Assignment Help:

Multi-period Compounding or else Future Value :- If the company determination compounding interest half-yearly (semi-annually) instead of annually then investors will gain as he will get interest on half-yearly interest. Ever since interest will be compounded half-yearly for finding out the compound value.

FV = PV (1+i/m) n x m

Where FV = Future value of the preliminary flow in n years

PV= Initial Cash flow

i= Annual rate of interest

n = No. of years for which compounding is done.

m= No. of times compounding is done during a year.

Instance: - Mr. X invests Rs. 10000 at 10% p.a compounded semi-annually. Compute value after three years.

FV = PV (1+i/m) n x m

FV= 10,000 (1+.10/2) 3 x 2

FV = Rs. 11,025


Related Discussions:- Multi-period compounding or else future value

Nominal interest rate, You are considering an investment in a 40-year secur...

You are considering an investment in a 40-year security. The security will pay $25 a year at the end of each of the first 3 years. The security will then pay $30 a year at the end

Define the matching principle of working capital financing, What is the mat...

What is the matching principle of working capital financing?  What are the advantages of following this principle? The matching principle is while short-term financing is employe

Explain why accounting profits and cash flows are different, Explain why ac...

Explain why accounting profits and cash flows are not the same thing. Ans: Stock value relies on future cash flows, their timing, and their riskiness.  Profit calculations do n

Define implicit cost and explicit costs, Q. Define Implicit cost and explic...

Q. Define Implicit cost and explicit costs? Implicit cost and explicit costs: the implicit cost is the rate of return associated with the best invests opportunity for the firm

Define a sunk cost, What is a sunk cost?  Is it relevant while evaluating a...

What is a sunk cost?  Is it relevant while evaluating a proposed capital budgeting project?  Explain. A sunk cost is a cash flow which has previously occurred, or that will take

Working capital management, I need a report on Working Capital Management. ...

I need a report on Working Capital Management. Can you please assist me for Working Capital Management report for about 2500 words?

Accounting principle, Accounting Principle Accounting principles are t...

Accounting Principle Accounting principles are the primary assumptions, rules of operation, and necessary features that make up the framework for the construction of accountin

Role of interest groups in public policy making, Question 1: Explain cl...

Question 1: Explain clearly why "Public Policy Making constitutes a major part of the work of the Government. Question 2: Consider the role of interest groups in public

Formulation of optimum credit policy, A firm requires a clear policy regard...

A firm requires a clear policy regarding as to whether the credit should be authorized to a customer and if yes to what extent. Credit principles are set for making such decisions.

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