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3 cards from this section. Quick, good the night before a test.
What is the formula for calculating Present Value?
Remember, you need to discount future cash flows to today’s value.
If you have a future value of ₹20,000 to be received in 2 years at an interest rate of 10%, how would you calculate PV?
Plug in the values for FV and r.
What does PV stand for in finance?
Think about its relationship with money and time.
True or False: Present Value is always greater than Future Value.
Consider the principle of time value of money.
You receive an offer to be paid ₹50,000 in 4 years. If the discount rate is 15%, what is the Present Value?
Make sure to calculate the power of (1 + r) accurately involving compounding.
A company is expected to receive ₹1 million in 10 years. If its cost of capital is 10%, what is the Present Value?
Don't forget to use the exponent correctly in your calculation.
6 more questions in this section. Enroll free to practise them all.
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