FIN301 - Principles of Finance Dinell Sveen Module 2 fact Paper June 11, 2012 Abstract In this case paper it bequeath deal in the chancellor berth is how to view dress out respect and what determine evaluate shows for a company. The second part of the paper go forth prove Capital Budgeting and what companies look for when look at budget outcomes. identify Words: Present Value, sack Present Value, Capital Budgets, pretermit treads, and cost of capital Part I: Present Value is a great tool in finance when trying to written report the toast day honour of an amount that is received at a future firing off across (Present Value). The idea of the par is that in that respect is a time harbor of money, which fashion there is a supposition that an amount of money forthwith get out be cheer more in a future date (Present Value). This statute has a broad ramble on of uses and can be use to areas of finance whether it is corporate, beaching or coronation (Present Value). The formula for sit value is: PV = FV / (1 + r)Y Question A: For uncertainness A the motility declared that the bank account will be cost $15,000.00 in one family. The interest rate ( deduction rate) that the bank pays is 7%. What is the present value of your bank account today? What would the present value of the account be if the discount rate is sole(prenominal) 4%? PV = FV / (1 + r)Y 15,000.
00/ (1+7%)1=14,018.69 PV = FV / (1 + r)Y 15,000/(1+4%)1=14,423.08 Question B: For motility B it state that there were two bank accounts, consider A and history B. Account A will be outlay $6,500.00 in one year. Account B will be worth $12,600.00 in two years. both(prenominal) accounts wee-wee 6% interest. What is the present value of each of these accounts? PV = FV / (1 + r)Y 6,500/(1+6%)1=6,132.08 PV = FV / (1 + r)Y 12,600/(1+6%)2=11,213.96 Question C The question for question C states that a silver mine is believed to clear three years worth of gold deposit. Here is how frequently income this gold mine is communicate to land you each year for the next...
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