Session1-2 - FMP - Present value Discount Rates N Years Future Value 100 6 5 133.82 Present value Discount Rates N Years Future Value 50 eur 5 4 60.78

Session1-2 - FMP - Present value Discount Rates N Years...

• Notes
• 89

This preview shows page 1 - 13 out of 89 pages.

Present value 100 Discount Rate 6% Nº Years 5 Future Value: 133.82 Present value 50 eur Discount Rate 5% Nº Years 4 Future Value: 60.78 Future value 100 Discount Rate 6% Nº Years 5 Present Value 74.73 It is also called the discounted cash flow rate of return (DCFROR) or simply the rate of return (ROR In the context of savings and loans the IRR is also called the effective interest rate. 30-year Bond 100,000,000.00 Price 112.09% Coupon 4.75% IRR (TIR): 4.05% 0 -112,090,000.00 1 4,750,000.00 2 4,750,000.00 3 4,750,000.00 4 4,750,000.00 5 4,750,000.00 6 4,750,000.00 7 4,750,000.00 8 4,750,000.00 9 4,750,000.00 10 4,750,000.00 11 4,750,000.00 The internal rate of return ( IRR ) is a rate of return used in capital budgeting to measure and com Notional = Face Value = Principal
12 4,750,000.00 13 4,750,000.00 14 4,750,000.00 15 4,750,000.00 16 4,750,000.00 17 4,750,000.00 18 4,750,000.00 19 4,750,000.00 20 4,750,000.00 21 4,750,000.00 22 4,750,000.00 23 4,750,000.00 24 4,750,000.00 25 4,750,000.00 26 4,750,000.00 27 4,750,000.00 28 4,750,000.00 29 4,750,000.00 30 104,750,000.00 IRR(TIR): 4.05% 30-year Bond REALISTIC DATES 100,000,000.00 Price 112.09% Coupon 4.75% XIRR(TIR): 4.09% 15/09/2009 -112,090,000.00 04/07/2010 4,750,000.00 04/07/2011 4,750,000.00 04/07/2012 4,750,000.00 04/07/2013 4,750,000.00 04/07/2014 4,750,000.00 04/07/2015 4,750,000.00 04/07/2016 4,750,000.00 04/07/2017 4,750,000.00 04/07/2018 4,750,000.00 04/07/2019 4,750,000.00 04/07/2020 4,750,000.00 04/07/2021 4,750,000.00 04/07/2022 4,750,000.00 04/07/2023 4,750,000.00 04/07/2024 4,750,000.00 Notional = Face Value = Principal
04/07/2025 4,750,000.00 04/07/2026 4,750,000.00 04/07/2027 4,750,000.00 04/07/2028 4,750,000.00 04/07/2029 4,750,000.00 04/07/2030 4,750,000.00 04/07/2031 4,750,000.00 04/07/2032 4,750,000.00 04/07/2033 4,750,000.00 04/07/2034 4,750,000.00 04/07/2035 4,750,000.00 04/07/2036 4,750,000.00 04/07/2037 4,750,000.00 04/07/2038 4,750,000.00 04/07/2039 104,750,000.00 XIRR(TIR): 4.09% 30-year Bond REALISTIC DATES XNPV 100,000,000.00 Price 112.87% Coupon: 4.75% Discount Rate: 4.05% XNPV 112,874,149.42 15/09/2009 0.00 04/07/2010 4,750,000.00 04/07/2011 4,750,000.00 04/07/2012 4,750,000.00 04/07/2013 4,750,000.00 04/07/2014 4,750,000.00 04/07/2015 4,750,000.00 04/07/2016 4,750,000.00 04/07/2017 4,750,000.00 04/07/2018 4,750,000.00 04/07/2019 4,750,000.00 04/07/2020 4,750,000.00 04/07/2021 4,750,000.00 04/07/2022 4,750,000.00 04/07/2023 4,750,000.00 04/07/2024 4,750,000.00 04/07/2025 4,750,000.00 04/07/2026 4,750,000.00 04/07/2027 4,750,000.00 04/07/2028 4,750,000.00 Notional = Face Value = Principal
04/07/2029 4,750,000.00 04/07/2030 4,750,000.00 04/07/2031 4,750,000.00 04/07/2032 4,750,000.00 04/07/2033 4,750,000.00 04/07/2034 4,750,000.00 04/07/2035 4,750,000.00 04/07/2036 4,750,000.00 04/07/2037 4,750,000.00 04/07/2038 4,750,000.00 04/07/2039 104,750,000.00
R).[1] mpare the profitability of investments.
bloomberg.com/markets/rates/germany.html
Annuity Discount 6% Annuity NPV 505.44 0 505.48 15/09/2009 0 1 120 15/09/2010 120 2 120 15/09/2011 120 3 120 15/09/2012 120 4 120 15/09/2013 120 5 120 15/09/2014 120 Perpetuity Discount 6% Growth R 3% Present 4,000.00 € 0 0.00 1 120.00 2 123.60 3 127.31 4 131.13 5 135.06 6 139.11 7 143.29 8 147.58 9 152.01 10 156.57 11 161.27 12 166.11 13 171.09 14 176.22 15 181.51 16 186.96 17 192.56 18 198.34 19 204.29 20 210.42 21 216.73 22 223.24 23 229.93 24 236.83 25 243.94 26 251.25 27 258.79 28 266.55 29 274.55 30 282.79
31 291.27 32 300.01 33 309.01 34 318.28 35 327.83 36 337.66 37 347.79 38 358.23 39 368.97 40 380.04 41 391.44 42 403.19 43 415.28 44 427.74 45 440.57 46 453.79 47 467.41 48 481.43 49 495.87 50 510.75 51 526.07 52 541.85 53 558.11 54 574.85 55 592.09 56 609.86 57 628.15 58 647.00 59 666.41 60 686.40 61 706.99 62 728.20 63 750.05 64 772.55 65 795.73 66 819.60 67 844.19 68 869.51 69 895.60 70 922.46 71 950.14 72 978.64 73 1,008.00 74 1,038.24 75 1,069.39 76 1,101.47 77 1,134.52 78 1,168.55 79 1,203.61 80 1,239.72 81 1,276.91
82 1,315.21 83 1,354.67 84 1,395.31 85 1,437.17 86 1,480.29 87 1,524.69 88 1,570.43 89 1,617.55 90 1,666.07 91 1,716.06 92 1,767.54 93 1,820.56 94 1,875.18 95 1,931.44 96 1,989.38 97 2,049.06 98 2,110.53 99 2,173.85 100 2,239.06 101 2,306.24 102 2,375.42 103 2,446.69 104 2,520.09 105 2,595.69 106 2,673.56 107 2,753.77 108 2,836.38 109 2,921.47 110 3,009.11 111 3,099.39 112 3,192.37 113 3,288.14 114 3,386.79 115 3,488.39 116 3,593.04 117 3,700.83 118 3,811.86 119 3,926.21 120 4,044.00 121 4,165.32 122 4,290.28 123 4,418.99 124 4,551.56 125 4,688.10 126 4,828.75 127 4,973.61 128 5,122.82 129 5,276.50 130 5,434.80 131 5,597.84 132 5,765.77
133 5,938.75 134 6,116.91 135 6,300.42 136 6,489.43 137 6,684.11 138 6,884.64 139 7,091.18 140 7,303.91 141 7,523.03 142 7,748.72 143 7,981.18 144 8,220.62 145 8,467.23 146 8,721.25 147 8,982.89 148 9,252.38 149 9,529.95 150 9,815.85 151 10,110.32 152 10,413.63