State the example to calculate the present value, Financial Management

Assignment Help:

State the Example to calculate the present value

2, 00,000 $ is the amount which you require after 20 years for your retirement. How much must you invest now at 5% per annum compounded yearly?

Solution

Here i = 0.05, FV = 2, 00,000, and n = 20. Putting it in the formula we get:

Present value = 200000 / (1+0.05)20

Solve this or use present value table.

Using present value interest factor table we find that present value of 1 $ of 20 years from now at 5% interest is 0.3769. Multiplying it with future value 2, 00,000 $ we get:

PV = 2, 00,000 x 0.3769 = 75,380 $

 


Related Discussions:- State the example to calculate the present value

Types of rating - debt rating, Based on the period involved in repaym...

Based on the period involved in repayment of the debt obligations, the debt instruments could be classified into long-/medium-/short-term debt instruments.

What are the misstatements, Q. What are the misstatements? A Misstatem...

Q. What are the misstatements? A Misstatement is Inconsequential - If a reasonable person would determine after considering the possibility of further undetected misstatement

Determine the expected net present, Karl Robinson is about to make his firs...

Karl Robinson is about to make his first major decision as president and chief executive officer of Conway Control & Instrument Corporation, a manufacturer of electronic test instr

CAPM, Techiniques of capm Effects of capm

Techiniques of capm Effects of capm

Financial control, Internal capital rationing is used by firms for exercisi...

Internal capital rationing is used by firms for exercising financial control. How does a firm achieve this?

Calendar studies, Calendar Studies These attempted to predict rates of ...

Calendar Studies These attempted to predict rates of return during a calendar year and examine if there is any particular observable pattern in the rates of return on the stock

Define flowcharts - documenting the accounting system, Flowcharts - Documen...

Flowcharts - Documenting the accounting system Depict in outline the sequence of events in a system showing document flow and department or function responsible for every ev

Manage Budget and Financial Report, Complete the financial reporting for ea...

Complete the financial reporting for each period and develop recommendations using the templates provided. Procedure 1. Read the case study. 2. Complete the financial reports

Why is the coefficient of variation a better risk measure, Why is the coeff...

Why is the coefficient of variation a better risk measure to use than the standard deviation when evaluating the risk of capital budgeting projects? The coefficient of variatio

Categorization of management risk , Categorization of management risk: ...

Categorization of management risk: Once each event has been evaluated, and been classified as to its probability and impact, the next step is to categorise those events. To do

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