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Net present value - discount factor 10%...?
What if the question just says discount factor 10%... I'm not sure how you work out what other values you need to multiply the cash flows by?
It seems the values come out of no where... they're 0.9091, and then 0.8264, and then 0.7513... where on earth do these come from?
I don't know how I am supposed to answer the question with just 'discount factor 10%, as I have no idea if you can even work out the other values!
Haha help please :)
Thanks!
2 Answers
- Don GLv 79 years agoFavorite Answer
The factors you listed are from the TVM tables for the Present Value of $1, at a rate of 10%, with a time frame of 1, 2, and 3 periods.
The PV of 1,000, to be received in 3 yrs, at a discounted rate of 10%, is 1,000 x .7513, or 751.30.
Google TVM for more info.
- Anonymous4 years ago
NPV refers back to the price today of funds gained sometime interior the destiny. once you've 15000 kilos today and making an investment for 10 years then you are speaking about destiny value it really is determined by assuming some annual interest fee of go back and compounding that fee. The opposite; if you're receiving 15000 kilos 10 years from now; the question is how a lot is it nicely worth to you today. as a way to respond to you may make an assumption about what interest fee of go back you are able to anticipate over the subsequent ten years.