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Explain at present value method in short and with example

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Answer:

Explanation:

is the CURRENT value of a future sum of money or stream of cash flows given a specified RATE of return. Future cash flows are discounted at the discount rate, and the higher the discount rate, the LOWER the present value of the future cash flows EXAMPLE Let's SAY you have the choice of being paid $2,000 TODAY or $2,200 one year from now. You also have the option of investing the $2,000 that'll earn a 3% rate of return over the next year



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