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    Accounting measures based on present values: annuity or lump sum?

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    Identify three situations in which accounting measures are based on present values. Do these present value applications involve single sums or annuities, or both single sums and annuities? Explain.

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    Net Present Value: This is the difference between the initial outlay or investment and the present value of the future cashflow savings for a project. This may or may not be a formal annuity since the savings in the future years is not always even (same each year). So, when the savings vary by year, it is a combination of many single sums (one for each year). But it is often a classic ...

    Solution Summary

    Your discussion is 302 words gives you three examples, one accounting measure of each kind.

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