Learn how to calculate present value and discount factors of investment of a firm. Calculation of Present Value: It is a method of assessing the worth of an investment by inverting the compounding process to give present value of future cash flows. This process is called “discounting”. The present value of 'P' of the amount 'A' due at the end [...]
Learn how to calculate risk and return on portfolio of securities in a firm. Return on Portfolio: The expected return from a portfolio of two or more securities is equal to the weighted average of the expected returns from the individual securities. Σ(RP) = WA(RA) + WB(RB) Where, Σ(Rp) = Expected return from a portfolio of two securities WA = [...]
The following article will guide to learn how to calculate annuity of cash flows in a company. An annuity is a cash flow, either income or outgoings, involving the same sum in each period. An annuity is the payment or receipt of equal cash flows per period for a specified amount of time. For example, when a company set aside [...]