ARBUS102 Lecture Notes - Lecture 11: Vending Machine, Net Present Value, Cash Out
17 Apr 2016
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#7 ixed markeing costs for both make & buy. Time value grows to 1,276. 28 @ 5% Future value (fv) in 5 years is 1276. 28: is pv of 1276. 28 in 5 years considered to be inancially equal, or 1276. 28 is fv of 1000 in 5 years @ 5% Paterns: assume invent = pv higher the rate, higher the fv. Assume fv is : higher the rate, the lower the pv. Corporaions buying assets (machinery, business, product lines, vehicles, etc. ) Buying assets to make money, higher income, etc. Expressing earnings on a percent (roe, roa, etc. ) Forecasing cash lows by year: value of money is diferent depends on when its received or paid. Soluion: translate all cash lows to pv: value today x rate to be used (desired rate of return) Simplisically want to make 50% on money. Opportunity invest ,500: receive 2000 @ end of year 1, 2000 @ end of year 2.
