1 / 9

VALUATION OF FUTURE CASH FLOWS

VALUATION OF FUTURE CASH FLOWS. WOULD YOU RATHER HAVE $10,000 TODAY OR $100,000 IN 20 YEARS???. Calculating Future and Present Values of Cash Flows. Formulas Tables Financial Calculators Microsoft Excel. FUTURE VALUE. What Table Do I Use?. FV of $1 How much will $1 grow to in the future?

morna
Download Presentation

VALUATION OF FUTURE CASH FLOWS

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. VALUATION OF FUTURE CASH FLOWS WOULD YOU RATHER HAVE $10,000 TODAY OR $100,000 IN 20 YEARS???

  2. Calculating Future and Present Values of Cash Flows • Formulas • Tables • Financial Calculators • Microsoft Excel

  3. FUTURE VALUE

  4. What Table Do I Use? • FV of $1 • How much will $1 grow to in the future? • How much will I have in 30 years if I invest $1,000 now at 6% ? • How much will something cost in the future? • How much will a double cheeseburger in 40 years if the $1.00 cost increases by four percent per year?

  5. What Table Do I Use? • FV of Annuity • How much will $1 every year grow to in the future? • How much will I have in 30 years if I invest $2,000 every year at 9% ?

  6. What Table Do I Use? • PV of $1 • What is $1 in the future worth today? • How much is $1,000 received in 30 years worth today? • Must be less than $1,000 !!!

  7. PRESENT VALUE HOW MUCH IS $100,000 RECEIVED IN 20 YEARS WORTH TODAY IF YOU CAN INVEST AT 12% INTEREST COMPOUNDED ANNUALLY?? PV = $100,000 / (1.12)20 = $10,567

  8. PRESENT VALUE

  9. What Table Do I Use? • PV of Annuity • How much will $1 received every year in the future worth today? • How much is it worth today to receive $80 per year for 30 years if I want a 9% rate of return?

More Related