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The present value of future cash flows has what relationship to interest rate?
The present value of future cash flows is inversely related to the interest rate.
What is the difference between discount factor and discount rate?
Discount factor is the factor determining future cash flow, but multiplying the cash flow to obtain present value. Discount rate is used in calculations to equal the cost of capital.
What is the relationship between the present value factor and annuity present value factor?
Present value annuity factor calculates the current value of future cash flows. The present value factor is used to describe only the current cash flows.
Formula for calculating cash debosit ratio?
cash reserve ratio
What is the difference between face amount and cash value?
The face value is what your beneficiaries will collect. The cash value is the excess of your premium payments over the cost of the insurance. Click here for more about life insurance cash value.
Is valuation of a financial asset based on concept of determining the present value of future cash flows?
How is the value of any asset whose value is based on expected future cash flows determined?
How is the future value of a mixed stream of cash flows calculated?
formula for future value of a mixed stream
What is the future vaue of 100 cash flow for 8 percent at 10 years?
Formula for future value = 100(1 + 0.8)^10 = 215.89
The present value of future cash flows has what relationship to interest rate?
The present value of future cash flows is inversely related to the interest rate.
What is the difference between discount factor and discount rate?
Discount factor is the factor determining future cash flow, but multiplying the cash flow to obtain present value. Discount rate is used in calculations to equal the cost of capital.
How do you compute present and future value of a cash flow stream?
Future Value = Value (1 + t)^n Present Value = Future Value / (1+t)^-n
How to calculate actual cash value?
Actual cash value (ACV) is calculated by determining the replacement cost of an item and then deducting depreciation based on its age, condition, and other factors. The formula for ACV is Replacement Cost - Depreciation. To calculate depreciation, you can use methods such as straight-line depreciation or the declining balance method. It's important to consider all relevant factors to accurately determine the actual cash value of an item.
What is the importance of cash flow timing in determining the present and the future value of an investment?
Since the valuation of cash flows takes the amount of time to discount or compound into consideration, the timing of the cash flows plays an important role in determining both present and future value of those cash flows in an investment. For example, a cash flow occurring one year from now will be discounted less than a cash flow taking place five years from now. Similarly, you would rather receive $100 today as opposed to $100 five years from now since the money received today may receive compounding interest while you wait to receive the $100 five years from now.
The present value of the expected future cash flows of an asset represents the asset's?
intrinsic value
Why is impairment tested using undiscounted future cash flows rather than the present value of future cash flows?
Original cashlow to match principal
Cash flows more important than profits?
1. Why are we interested in cash flows rather than accounting profits in determining the value of an asset?
What approaches can be taken in valuing a firm's stock when there is no cash dividen payment?
In valuing a firm with no cash dividend, one approach is to assume that at some point in the future a cash dividend will be paid. You can then take the present value of future cash dividends. A second approach is to take the present value of future earnings as well as a future anticipated stock price. The discount rate applied to future earnings is generally higher than the discount rate applied to future dividends.
