BUSN 70 Lecture Notes - Lecture 58: Negative Number, Net Present Value
13 Mar 2021
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Introduction to valuation: the time value of money, net present value, internal rate of. Rearrange to solve for pv = fv / (1 + r) t. When we talk about discounting, we mean finding the present value of some future amount. When we talk about the value of something, we are talking about the present value unless we specifically indicate that we want the future value. Suppose you need ,000 in one year for the down payment on a new car. Pv = 10,000 / (1. 07) 1 = 9345. 79. Pv = -9345. 79 (hit cpt hit pv) You want to begin saving for you daughters college education and you estimate that she will need ,000 in 17 years. Pv = 150,000 / (1. 08) 17 = -40,540. 34. Pv = -40,540. 34 (hit cpt hit pv) Pvs are negative b/c it"s money people have spent. The longer the time period, the lower the present value will be.
