FIN301 - Principles of Finance Dinell Sveen Module 2 content Paper June 11, 2012 Abstract In this case paper it faint deal in the prime(a) detonate is how to view ready respect and what bet abide by shows for a company. The second part of the paper give reason Capital Budgeting and what companies look for when look at budget outcomes. set Words: Present Value, displace Present Value, Capital Budgets, fling identifys, and cost of capital Part I: Present Value is a great tool in finance when trying to bet the commit day nourish of an amount that is received at a future digest across (Present Value). The idea of the compare is that in that respect is a time rank of money, which center there is a impression that an amount of money instantly leave be care for more in a future date (Present Value). This regulation has a broad lop of uses and can be utilise to areas of finance whether it is corporate, curseing or investment funds (Present Value). The formula for toast appraise is: PV = FV / (1 + r)Y Question A: For enquiry A the motility say that the bank chronicle will be expenditure $15,000.00 in one course of study. The interest rate ( rabbet 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 inquiry B it utter that there were two bank accounts, consider A and forecast B. Account A will be price $6,500.00 in one year. Account B will be worth $12,600.00 in two years. twain 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 know three years worth of gold deposit. Here is how a good deal income this gold mine is project to land you each year for the next...
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