corporate-finance

# 2 df 1 1 r t download free ebooks at bookbooncom 10

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Unformatted text preview: of return on equivalent investment alternatives in the capital market. (2) DF = 1 (1  r ) t Download free ebooks at bookboon.com 10 Corporate Finance Present value and opportunity cost of capital Where r is the discount rate and t is the number of years. Inserting the discount factor into the present value formula yields: (3) PV = Ct (1  r) t Example: - What is the present value of receiving €250,000 two years from now if equivalent investments return 5%? PV = - Ct (1  r) t €250,000 1.05 2 € 226,757 Thus, the present value of €250,000 received two years from now is €226,757 if the discount rate is 5 percent. From time to time it is helpful to ask the inverse question: How much is €1 invested today worth in the future?. This question can be assessed with a future value calculation. Please click the advert what‘s missing in this equation? You could be one of our future talents maeRsK inteRnationaL teChnoLogY &amp; sCienCe PRogRamme Are you about to graduate as an engineer or geoscientist? Or have yo...
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## This note was uploaded on 10/26/2012 for the course 19 19 taught by Professor - during the Spring '12 term at Sunway University College.

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