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    NPV of an investment with two different annuities

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    How can I tell when to do a PV calculation and when to do a FV calculation?

    How do you calculate NPV of an investment with two different annuities?

    How do you calculate the NPV when the purchase has a salvage value?

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    Solution Preview

    Present value
    Present value is an important concept of the financial management. This is concept derived from the time value of money. The basic idea of time value of money is that a dollar today is worth more than a dollar tomorrow. (finance professor, 2009).
    The investor has time preference of money because he can reinvest the funds, which are received early and can earn additional money Present value, is the future value being discounted by the rate of interest. This is because of reasons discussed before.
    This concept is important because the major financial objective of the organization "Wealth ...

    Solution Summary

    Response helps in estimating NPV of an investment with two different annuities.