Value PV = $15,000 / (1+.07) 1 Essay

Total Length: 436 words ( 1 double-spaced pages)

Total Sources: 4

Value

PV = $15,000 / (1+.07)^1 = $14,018.69.

At 4%, this is $15,000 / (1.04) = $14,423.08

The PV of Account A is 6500 / 1.06 = $6,132.07. The PV of Account B. is 12,600 / (1.06)^2 = $11,213.96

Income

PV

NPV

The present value of the entire income stream is $168,459,500.

Income

PV

NPV

Income

PV

NPV

What this example shows is that the net present value of a future cash flow increases with a lower discount rate. The reason for this is that a lower discount rate means the less purchasing power of the future cash flow is diminished.

Stuck Writing Your "Value PV = $15,000 / (1+.07) 1" Essay?

So in this situation the gold mine is worth more at a 3% rate than a 5% rate, and both are worth more than at a 7% rate.

A. The project's NPV at a discount rate of 0% is $670,000

The project's NPV at a discount rate of 2% is $614,353

The project's NPV at a discount rate of 6% is $514,815

The project's NPV at a discount rate of 11% is $408,997

The project's modified internal rate of return is 28% at the 11% reinvest rate. If.....

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Value PV = $15,000 / (1+.07) 1 Essay

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