the end of the lecture, you should be able to; ®stde © Weae hing a critl ryt CCAPA CAP) these are having Cal MHEG isk. Now we want t cakalate ¢ compare oe te having Fran TREE nvestments . dsee in wich — pralent we tharld serest are ————> nero Disoeat fret aed. det ‘Dscoanting De overeseive 11000 hat 15 the PF Of that Ae pecswt Gomer Set what & the HOF ts tee, S08) FY, ° Pre OO ee a5a0 ae eee Cx ky & ov) ——— Nev TR kh ? Rs. «0 000 —> F Crore wer beome 2er) Aggsint. (Rs '000) ‘Discount factor pL = The Deasito wie of TRE IS ye the TER is greater than the eppertontty Yer 1 300 0-904 man eso | ck of Capital the investment 15 praftable and oll yield a positive Ps 1000 are ane 400 | NPY Aiternatirely € the 222 Is Jest then the: cost oF capital the od Investment i unpafitable & ill regula in a negetee NPY: . re 0.4813 3 ae . i < fessinvial —ctsh outleg : ew —7/5/2021 Compounding and Discounting * Suppose you ae investing 8,100.00 na ike security yeding 2 -felurn of 19 percent payable atte end of each year FV, = Vo(1 + K)* CSscouning andthe renting presen value ithe scoured present valve. Vo (present value) = Toa [The Pana of Net Present Value markt, the NPV wl be postive. Alternatively, the rate of return owes, the NPV will be neg~*— weefie ache ni ark rare Gree Factor In her onrdS qAiscointadk vie ak oll coarse the Nev of an investment t be zero. |The Internal Rate of Return : ate of return IRR i an alternative technique for use in a1 + An investment has the following cash inflows and cash outflows: Bae iim eee: ses * What isthe net present value ofthe investment at a discount rate of B percent?gidneg make matty mvestment ~ —9 0 ger 6 TP birthdag. - er ae presentoge mre pa-b5/ danas 7/5/2021 A These payments ae Sone WGANGHS payment bez investigaccensrane —amuuney (Pee per mens} 2 oa + Spdey whe to maken nvesinant ona month bad sarteg next month for five years The payments into the fund would be made month. The intrest at wil cent = fod ebihly inteest. rate = Find fafare value ot Ink eese This year 2 ports diar the volue apres yeas ~ tema! value © © isweors volue ~ after Sears Ferminal walee- o Use future value annuity fermular a (Gerd er -Gake a lear — the loan value of 20000 represent Present value of Series c& payments and eepaynents over a thiee years of a povied Sine the payeents are castont Perper oe Gn ace He natty present vabieforubr . — r ES use er tis annuity pretenr wale Formalar —— rok wt 3