文档介绍：Chapter 5
Discounted Cash Flow Valuation
The Beginning Story
Ivan Pudge Rodriguez
Peyton Manning
4 years, $40 million.
9 years, $126 million.
The Circumstances We’ve Discussed
PV
FV
PV, FV, r, n
The Circumstances We’ll Discuss
When
C1=C2=C3=…… Annuities
C1=C2=C3=…… and N continues forever Perpetuities
r is given in another way APR
0
…
1
C1
2
C2
3
C3
PV
FV
N
r
FV t= C t ×(1 + r)t,∑ FV t
PV t= C t ÷(1 + r)t ,∑ PV t
Chapter Outline
Future and Present Values of Multiple Cash Flows
Valuing Level Cash Flows: Annuities and paring Rates: The Effect pounding
Loan Types and Loan Amortization
Value with Multiple Cash Flows
Find the value at year 3 (and 4)of each cash flow and add them together.
0
1
2
3
4
7000
4000
FV
FV’
P150
Example
Future Value with Multiple Cash Flows
0
1
2
3
4
100 200 300
FV
FV’
P152
Example
5
Multiple Cash Flows – FV
Suppose you plan to deposit $100 into an account in one year and $300 into the account in three years. How much will be in the account in five years if the interest rate is 8%?
Year 1 CF: 4 N; -100 PV; 8 I/Y; FV =
Year 3 CF: 2 N; -300 PV; 8 I/Y; FV =
Total FV = + =
100
300
0 1 2 3 4 5
Value with Multiple Cash Flows
Find the PV of each cash flows and add them
Year 1 CF: N = 1; I/Y = 12; FV = 200; PV =
Year 2 CF: N = 2; I/Y = 12; FV = 400; PV =
Year 3 CF: N = 3; I/Y = 12; FV = 600; PV =
Year 4 CF: N = 4; I/Y = 12; FV = 800; PV =
Total PV = + + + =
200 400 600 800
0 1 2 3 4
P154
Example
Illustration: Example
0
1
2
3
4
200
400
600
800