You are on page 1of 4

Discounted cash flow valuation

Q1-FV=C*(1+R)^T
A-10years at 6 percent
Fv=10000*(1+0.06)^10
=17908.48
B-10YEARS at 6 percent
Fv=10000*(1+0.12)^10
31058.48=
c-20years 6percent
fv=10000*(1+0.06)^20
32071.35=
d-A)because the interest earned depends not only
on the interest rate but also on the time the money
is invested in part c the money is the invested for
twice as long 20 years as in part a 10 years

Q2-1)future value 13287 years 8 interest 7%


PR=C1÷(1+r)^t
8^)1+0.07(÷13287
7733.155=
future value 43352 years 13 interest5%)2
PR=43352÷(1+0.05)^13
22990.49=
Q3-PV=242 Y=4 FV=345
FV=C*(1+R)^T
4^)R+1(*242=345
4^)R+1(=242÷345
4^)R+1(=1.4256
1.4256^4=)R+1(
R=1.4265^(1÷4)
R=1.092869
R=1.0928698*100
R=10%
PV=210 Y= 8 FV=927
8^)R+1(*210=927
8^)R+1(=210÷927
8^)R+1(=4.4142
R=4.4142^(1÷8)
R=1.2039*100
R=11.94%
Q4-PV = PMT * [(1 - (1 + r)^(-n)) / r]
:For Investment X
PMT = $3,900
r = 5% (0.05)
n=9
:For Investment Y
PMT = $6,100
r = 5% (0.05)
n=5
:or Investment X
PV_X = $3,900 * [(1 - (1 + 0.05)^(-9)) / 0.05]

:For Investment Y
PV_Y = $6,100 * [(1 - (1 + 0.05)^(-5)) / 0.05]
Q5-PV = CF / (1 + r)^n
PV = $675 / (1 + 0.10)^1
PV = $675 / 1.10
PV ≈ $613.64

PV = 880 / (1 + 0.10)^2-2

PV = 880 / (1.10)^2

PV = 880 / 1.21

PV ≈ $727.27
.

-3
PV = 985 / (1 + 0.10)^3

PV = 985 / (1.10)^3

PV ≈ 985 / 1.331

PV ≈ $740.2

You might also like