Required 1. Prepare a Present Value Comparison using PV formulas

Q: What is the Economic Value Added (EVA) method? Provide a definition, state a formula, and define all…

A: Economic Value Added (EVA): EVA also called economic profit is a measure of the financial…

Q: For each of the following, compute the future value.

A: Future Value (FV)= To determine value of cash flow at a future date. Formula used to determine…

Q: Define a fixed against a variable cost and give an example of each?

A: A fixed cost is a cost that does not change with the level of output or activity in a business. It…

Q: Define total net present value (TNPV)

A: Total net present value of an investment is the present value of the future cash inflows due to a…

Q: two terminal valuation methods used in DCF valuations, and give the formulas for each.

A: Terminal value is the value of an asset, a business, or a project beyond the expected period when…

Q: What would be the outputs for the given assumptions:   Total revenue: Total costs: Total profit:

A: Break Even Point is that point at which there is no profit & loss would arise. At break even…

Q: Which are the more complex applications of rate-of-return techniques/

A: The question is based on the concept of rate of return and its application in finance

Q: What are the most common DCF valuation models?

A: There are different types of DCF valuation models such as: 1.) BY using the terminal value technique…

Q: Can you show me how you calculated PV using a

A: Price of bond is the present value of coupon payments plus present value of the par value of the…

Q: Comparison of NPV, IRR or Payback period

A: The net present value (NPV) is the difference between the present value of cash inflows and…

Q: Which of the following is sometimes called a currently attainable standard? O a.par b.normal…

A: In this question, we are required to determine the standard which is sometimes known as currently…

Q: How can we determine the operating margin?

A: Operating margin refers to percentage of net operating income over the sales of the company.

Q: How can we obtain an equal-payment series equivalent to the gradient series?

A: The question is based on the concept of gradient series of payments, which is used in equivalent…

Q: Assume benefit is unchanged, how to manipulate  the cost to have positive NPV (net present value)

A: Net Present Value is the difference between PV of all cash inflows (benefits) and PV of all cash…

Q: Define efficiency ratios

A: Efficiency Ratios : These ratios are employed to evaluate the efficiency with which the firm manages…

Q: What is the ROE and operating Margin?

A: ROE = Net Income/Shareholders equity In the given case, Shareholders equity is 60 % of the vehicle…

Q: How to estimate the Residual Value?

A: Residual value means value of fixed asset left after the use of fixed assets. Residual value also…

Q: Explain four aspects of rate-of-return analysis?

A: The return of return is the return on investment made when the time value cashflows turns to net…

Q: Understand thedifferences between variablecosts and fixed costs.

A: Fixed costs are those costs which remain fixed regardless of output but variable costs are those…

Q: Describe the Methods for Finding Rate of Return?

A: Capital budgeting is the process a company follows to decide whether to purchase a fixed asset or…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.