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Discounted Cash Flow Valuation: Part I
McGraw-Hill/Irwin
Chapter Outline
Part I:
Future and Present Values of Multiple Cash Flows
Part II:
Valuing Level Cash Flows: Annuities and Perpetuities Comparing Rates: The Effect of Compounding Loan Types and Loan Amortization 6
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200
178.57
318.88 427.07 508.41 1,432.93
400
600
800
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should you take the investment? Use the CF keys to compute the value of the investment 3 N; 15 I/YR; 0 CF0; 40 CF1; 75 CF2; NPV = 91.49 No the broker is charging more (100) than the worth of that investment (91.49).
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0 0 0
Notice that the year 0 cash flow = 0 (CF0 = 0) The cash flows years 1 39 are 0 (C01 = 0; F01 = 39) The cash flows years 40 44 are 25,000 (C02 = 25,000; F02 = 5)
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6
Calculators
End of Chapter
McGraw-Hill/Irwin