FIN301 - Principles of Finance Dinell Sveen Module 2 Case Paper June 11, 2012 cop In this case composition it give contend in the initial part is how to expect make up send and what picture encourage shows for a company. The second part of the paper go away discuss Capital Budgeting and what companies look for when look at budget outcomes. tonality Words: grant Value, Net Present Value, Capital Budgets, brush aside rates, and cost of capital realm I: Present Value is a great rotating shaft in pay when trying to calculate the fork out twenty-four hour period value of an quantity that is received at a future day fight (Present Value). The idea of the equation is that thither is a duration value of money, which means there is a concept that an amount of money today will be deserving much in a future date (Present Value). This formula has a broad range of uses and can be applied to areas of finance whether it is corporate, banking or inves tment (Present Value). The formula for present value is: PV = FV / (1 + r)Y motility A: For indecision A the oral sex express that the bank account will be worthy $15,000.00 in one year. The interest rate (discount 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 only 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 question B it stated that there were two bank accounts, sum up A and Account B. Account A will be worth $6, 500.00 in one year. Account B will be worth ! $12,600.00 in two years. Both accounts progress to 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 amber mine is believed to have three years worth of sumptuous deposit. Here is how much income this gold mine is intercommunicate to bring you each year for the next...
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