How did they calculate the present value?

Q: How can the Present-Worth Comparison be done?

A: The present worth method of comparison will diminish the cash flows of every choice to time zero by…

Q: What will be the Effective Cost of Refinancing?

A: The term refinancing is related to mortgage refinancing, is a system that assists mortgage holders…

Q: what about in terms of present value?

A: Present value helps us know the value of future cash flows in the present time. A higher interest…

Q: Why does the time value of money component arise?

A: Time value of money: The value of amount on hand today is more value than the value of amount…

Q: What is the horizon value? Why is it also called the terminal valueor continuing value?

A: Horizon value is the value of the expected dividend that will be received after the horizon date.

Q: Write the methods of Calculating Interest?

A: Methods of calculating interest: The basic and fundamental methods for calculating interests are…

Q: What is the concept of present value? What is discounting?

A: Present value means value of future cash flows in todays terms.

Q: How is the payback period determined?

A:

Q: What is current market value? Describe about it.

A: Market value: Market value is the price at which, both seller and buyer agree to exchange the…

Q: Explain the Accumulation of a Future Sum?

A: The concept which gives the value or worth of money held today at the future date due to its…

Q: compare Future Value and Present Value?

A: The comparison between present value and future value is as follows:

Q: Explain an example how to determine the future value.

A:

Q: Which of the following is not a variable in the basic present value equation? Multiple Choice…

A: Investors are holding securities for the purpose of gaining the returns. The return is calculated…

Q: What should be done to find the equivalent present worth of the actual dollar amount?

A: Present value is the concept of discounting future value to bring it to today’s worth.

Q: What are the different terms used to refer to the rate of return?

A: Rate of return is an expected profit on an investment by a investor. It is a rate at which investor…

Q: Define the term Equivalent worth-calculation?

A: To define the term Equivalence worth calculation.

Q: How are research and development expenses treated?

A: Research and development(R&D) expenses: These  are the expenses which an entity incurs in…

Q: What is the process of consideration of the payback period?

A: Payback period It computes the required time to recover back the project’s investment by way of…

Q: What are the advantages and disadvantages of real assets?

A: The question is asking about the pros and cons of investing in real assets. Real assets are physical…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.