彼得罗斯公司理财Cap004.pptVIP

Discounted Cash Flow Valuation Key Concepts and Skills Be able to compute the future value and/or present value of a single cash flow or series of cash flows Be able to compute the return on an investment Be able to use a financial calculator and/or spreadsheet to solve time value problems Understand perpetuities and annuities Chapter Outline 4.1 Valuation: The One-Period Case 4.2 The Multiperiod Case 4.3 Compounding Periods 4.4 Simplifications 4.5 Loan Amortization 4.6 What Is a Firm Worth? 4.1 The One-Period Case If you were to invest $10,000 at 5-percent interest for one year, your investment would grow to $10,500. $500 would be interest ($10,000 × .05) $10,000 is the principal repayment ($10,000 × 1) $10,500 is the total due. It can be calculated as: $10,500 = $10,000×(1.05) The total amount due at the end of the investment is call the Future Value (FV). Future Value In the one-period case, the formula for FV can be written as: FV = C0×(1 + r) Where C0 is cash flow today (time zero), and r is the appropriate interest rate. Present Value If you were to be promised $10,000 due in one year when interest rates are 5-percent, your investment would be worth $9,523.81 in today’s dollars. Present Value In the one-period case, the formula for PV can be written as: Net Present Value The Net Present Value (NPV) of an investment is the present value of the expected cash flows, less the cost of the investment. Suppose an investment that promises to pay $10,000 in one year is offered for sale for $9,500. Your interest rate is 5%. Should you buy? Net Present Value Net Present Value In the one-period case, the formula for NPV can be written as: NPV = –Cost + PV 4.2 The Multiperiod Case The general formula for the future value of an investment over many periods can be written as: FV = C0×(1 + r)T Where C0 is cash flow at date 0, r is the appropriate interest rate, and T is the number of periods over which the cash is invested. Future Value Suppose a stock current