Multiple Cash Flows

# Multiple Cash Flows - 4000 FV (set \$4,000 uture value) 1 n,...

This preview shows pages 1–7. Sign up to view the full content.

Multiple Cash Flows Example 5.1, Page 122 Sunday, September 12, 2010

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Problem Start out with \$7,000 Invest \$4,000 at the end of the next three years Investment yields 8% Sunday, September 12, 2010
Method 1, Formulas PV = FV / (1+r)^t Use formula for each cash stream Add present values for total present value Project PV into future by using FV = PV * (1+r)^t Sunday, September 12, 2010

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Method 2, Table PV = FV * discount factor (appendix A.2) Add present values for total present value Project present value into future using table (appendix A.1) Sunday, September 12, 2010
Method 3, Fin. Calc. CLR FIN, 8 i (clear fnancial memory, set 8% interest) 7000 FV, calc PV, STO 0 (year 0 stored as present value)

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 4000 FV (set \$4,000 uture value) 1 n, calc PV, STO + 0 (year 1 added to present value) 2 n, calc PV, STO + 0 (year 2 added to present value) 3 n, calc PV, STO + 0 (year 3 added to present value) RCL 0, PV, 3 n, calc FV (total present value moved into year 3) 4 n, calc FV (moved into end o year 4) Sunday, September 12, 2010 Method 4, Excel PV(rate, periods, 0, FV) for each cash ow sum of all present values project into future using FV(rate, periods, 0, PV) Sunday, September 12, 2010 Method 5, Annuity PV: -\$7,000 PMT: -\$4,000 n: 3 i: 8% calc FV Sunday, September 12, 2010...
View Full Document

## This note was uploaded on 04/05/2011 for the course FIN 350 taught by Professor Debruinne during the Winter '11 term at Grand Valley State University.

### Page1 / 7

Multiple Cash Flows - 4000 FV (set \$4,000 uture value) 1 n,...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online