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

Enhance or maintain its image and reputation, a) Marketing might be vital t...

a) Marketing might be vital to an organisation such as WHSG for several reasons, including: • The need to be a focus for the right kind of students to the school (there are riva

How premium and discount are determine while asset are ptm, Explain how the...

Explain how the premium and discount are determined while assets are PTM (priced-to-market). When would the law of one price prevail in international capital markets although if fo

What do you mean by average cost and marginal cost, Q. What do you mean by ...

Q. What do you mean by Average Cost and Marginal cost? Average Cost and Marginal cost: the average cost is the combined cost as explain above, but for the difference in the for

CASELET, Prepare your recommendation on Agarwal Cast Company

Prepare your recommendation on Agarwal Cast Company

Calculate the annual revenue - capital budgeting analysis, The Donut Shop, ...

The Donut Shop, Inc. is planning to add a 2nd Donut Shop by opening a new store across from Webster University. A survey of the area has already been completed at a cost of $150,00

"a" round financing, "A" Round Financing "A" Round Financing is the fir...

"A" Round Financing "A" Round Financing is the first main round of business financing through private equity investors or venture capitalists. In private equity investing, an "

Find the impact of price and trading volume, Purpose of research: The a...

Purpose of research: The aims of this research are to examine the effectiveness of speculation on efficiency of Petrochemical sector in Saudi Arabia financial market"TADAWUL".

Solution to shareholders versus managers conflict, Solutions to this Confli...

Solutions to this Conflict In common, to make sure that managers act to the best interest of shareholders, the firm will: (a) Acquire Agency Costs in the form of:

Need for simulation, Need for Simulation If the mathematical model set...

Need for Simulation If the mathematical model set up could always be optimized by the analytical approach, then, there would be no need for simulation. Only when interrelation

Treasury yield curve, Treasury securities are government bonds issued...

Treasury securities are government bonds issued by the US Treasury Department. These are issued through the Bureau of the Public Debt. They are debt-financing ins

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