Purchase Solution

Valuation - Present and Future Value

Not what you're looking for?

Ask Custom Question

We examined two important topics in finance this week: (a) present and future values and (b) security valuation.

What is the importance of present and future values. What factors must be considered when calculating present and future values? What other qualitative factors play into present and future value decisions? Perhaps you have opportunities in your professional life to use present and future values. What are some real or potential applications of these concepts?

Why do bond values go down when interest rates go up? Is this true in the opposite direction?

Purchase this Solution

Solution Summary

This solution explains the present value and future value concepts and the factors that impact those values. The solution further explains some practical applications of these tools. Finally, the solution explains bond prices and how they fluctuate based on interest rates.

Solution Preview

Present and future values make sure that appropriate treatment is given to future cash flows. A dollar now is worth more than a dollar a year from now. Present and future value concepts ensure that both dollars are treated appropriately.

Factors that must be considered while calculating present and future values include:
1. Future Cash Flows
2. Discount Rate

Both the inputs above however are based on certain assumptions (or qualitative factors). Some of them are listed below:
1. In order to determine cash flows you need to make certain assumptions pertaining ...

Purchase this Solution

Free BrainMass Quizzes
Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.