Join Yash Patel for an in-depth discussion in this video Solution 1: Determine present, future, and terminal values, part of Investment Evaluation.
- [Instructor] Alright, welcome to your first…solution video.…If you want the solution data,…you can find it in 01_08_Solution1 of the exercise files.…Let's start by taking a look…at the first dataset…in which we're trying to determine future value.…And what I'm gonna do,…is I'm gonna actually gonna use the formula…provided right here…and solve it using that…instead of the Excel function.…So if I'm looking for future value,…I've got an initial investment of $20,000,…that's equal to my I, my discount rate,…or my interest rate is 12%,…so that's my lowercase i,…and my number of years is six,…which is gonna be that n right there.…
So let me type all this in…into the future value box in cell B7.…So that's equal to my initial investment, which is B3,…and that's gonna be multiplied…by one plus my interest rate,…and that interest rate should be in decimal form,…so 1.12 is gonna be the sum there,…and I'm gonna take that to the power of six,…because that's how many number of years we have…in the term.…So when I do that I get this ugly number,…
- Investment types
- Present, future, and terminal values
- Opportunity cost
- Calculating DCF
- Calculating NPV
- Calculating IRR
- Calculating the payback period
Skill Level Intermediate
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2. Discounted Cash Flow (DCF)
3. Net Present Value (NPV)
4. Internal Rate of Return (IRR)
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