+Jimi Hendrixx Glad you to hear that Jimi! Thanks for watching and please subscribe if you haven't already. That way you receive update on new content. Take care!
I'm studying for the PMP exam, and I was SO intimidated by this dang equation. My study materials didnt explain it in a way that was making sense, so I can to RU-vid and this is the ONLY video that helped! THANK YOU SO MUCH!
if this question said that ..for example: to get $1500 AT THE END OF 3 YEARS. can i still use this step that you show? or i have to use Ordinary Annuity formula?
singh4244 Bond interest rates vary based on a number of different variables. We're using those interest rates as a guide for discounting our future cash flows as that rates represents what we could've earned.
I understood the math, I still don't understand the analysis part. The present value of the $1500 in accordance with the interest rates given three years from now, is actually $1295. Or could we say that after three years the $1500 promise decreases to $1295?
Not necessarily because we are trying to calculate the present value as opposed to the future value. By discounting $1,500 we would say that the $1,500 we expect to receive at 3 years is worth $1,295 today. This is meant to incorporate the time value of money, since we will incur risk by not having the money for three years. That isn't to say that we would actually receive less in terms of the actually denomination of currency, but rather our spending power will have decreased. I hope that helps clarify.
Payments of $ 670 are being made at the end of each month for 5 years at an interest of 8% compounded monthly. Calculate the Present Value. Can anyone give me a solution of this question because i really need it ?? and i have one more question to get solve...
he subtracted $1000 to basically calculate the gain on investment. Youre giving up $1000 today in order to receive $1500 in 3 years. The PV calculation tells us what $1500 in 3 years is actually worth which is $1295.76. So the actual gain is $1295.76 (return in 3 years) minus the $1000.00 (todays investment) which is $295.76
@@regisuwakwe8024 Looks to me the $1,000 was subtracted unnecessarily and he made a slight mistake in his explanation. The initial investment wasn't $1,000, he kind of pulled that number out of thin air. The initial investment was $1,295.76 or present value rather of $1,500 in 3 years is $1,295.76. If he was going to subtract anything, he should've subtracted the $1,500 - $1,295.76 to show a gain of $204.24 from this investment. The present value of $1,295.76 equates to a future value of $1,500 considering a savings account that yields 5% over a period of 3 years.
Troy Lee It wasn’t a mistake. He is comparing receiving $1000 today from a friend and earning $1500 in 3 years versus investing $1295.76 today at 5% interest and earning $1500. You should choose to invest $1000 and save 295.76 in cash while still making $1500 in 3 years.
Ced Ricky I see, so $1,000 was a business proposition that has a lower initial cost than the Present Value of this 3 yr 5% interest investment. Therefore, he’s saying you should accept a hypothetical $1,000 investment prospect as you realize $295.76 in profit right away when considering the present value of a $1,500 payout from that 3yr 5% interest investment.
