Questions tagged [present-value]

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Rate mortage in Subperiod

I am dealing with a problem where the underlying problem is a simple fixed-rate mortage. So for any givien loan amount, say $L$, residual Value $RW$, duration $n$ and interest $i$ I want to calculate ...
77 views

Calculate interest

I'm kinda stuck with the following problem. I am given the terms in Month, a net-value, a residual value, and a monthly rate. Now my job is to calculate the interest. Usually I am giving the interest ...
33 views

For investment analysis, is it helpful to draw charts of present value (PV) against rate (%)

Background I prepared a prototype getting cash flow as input and drawing as output some charts like present value (PV) against rate (%). The points with big radius on chart of NPV against rate are IRR ...
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Discounted-cash-flow-analysis: Is it possible to calculate the the flow of cash given a certain fixed net present value?

Is it possible to calculate the flow of cash in each period given a certain fixed net present value? I would like to be able to apply a certain weighting that can be applied to the cash flows of each ...
19 views

Calculate series of cashflows based on a fixed value for their difference in net present value

I have two time series of cashflows, one for renting a building and one for buying it. Normally I calculate the net present value for both cashflows and then calculate their difference. I do this for ...
30 views

Net present value and inflation, risk, return etc

When calculating the net present value, it compares the present value of money today to the present value of money in the future, taking inflation, returns and risk into account? question 1. So if ...
34 views

Calculation cash flows for NPV = 0: numerical solutions

I have two time series of cashflows, one for renting a building and one for buying it. Normally I calculate the net present value for both cashflows and then calculate their difference. I do this for ...
32 views

Mortage Backed Securities: interest-only (IO) and principal-only (PO) - Present Value

Does any of you know what are the PV (present value) mathematical equations for Interest Only, and Principal Only MBS's (assuming no prepayments, or defaults)? I am not familiar with Mortgages, so I ...
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184 views

Geometric Brownian Motion and Energy-Efficiency Investments

Suppose the payoff $X$ on an investment follows a Geometric Brownian Motion: $$dX/X = \mu dt + \sigma dz\ ,$$ for $dz$ an increment of a Wiener process. I wish to compute the expected present value ...
92 views

Which relation stands between IRR and the cumulative profits?

In the graph below you can see an irregular Cash Flow. The graph is cumulative, on the y axes there are moneys, on the x the dates. In the second graph the IRR (...
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Valuing Acquisition Target Case Study - DCF and IRR?

Wondering how best to answer a case study I need to do. Case study info as follows: Given Selling company's P&L (3 years actual, 4 years forecast) - closing date on end of year 3 - and a PPT of ...
70 views

Should the NPV be equal to zero in liquid markets? [closed]

My question is actually very simple. I would like to motivate it by bringing the following example: suppose we have a (conventional) bond which generates $CF_1;CF_2;...;CF_n$ cash flow (for ...
292 views

NPV and efficient market hypothesis

If I have an opportunity of investment, let's call it investment (A), that costs $I$ in year 0 and gives me $CF_1$ in year 1, I will accept it only if $NPV>0$ $NPV = -I + \dfrac{CF_1}{1+k} > 0$ ...
51 views

PV of security with interest-dependent cash flows

I struggle with the following exercise, where the correct answer is supposed to be "no": A riskless security with cash flow $C_1, C_2, \dots, C_n$ has a market price of $\sum_{i=1}^n C_i\,d(i)$. ...
628 views

How would this 10s/20s steepener work

Say I'm interested in a trade that wants to execute a 10s/20s steepener This is done via a receiver leg on the 10s and a payer leg on 20s Look at the following example (the figures are all ...
327 views

How does one calculate the duration of a cash flow

The question reads: A firm has liabilities as follows: £2,910 at time t = 0 and £7,501 at time t = 4 (time is measured in years). On the asset side the firm has two payments, each for £5,000, at time ...
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Cash Flow for Operating Cost, Sheldon Ross Question

In his An Elementary Introduction to Mathematical Finance, 3rd Edition book, pg. 55, Sheldon Ross has a question - A company needs a certain type of machine for the next five years. They ...
878 views

How to calculate the NPV (Net present Value) in this question? [closed]

A company pays £1,200,000 to purchase a property. The company pays £30,000 at the end of each of the next six months to renovate the property. At the end of the eighth month the company sells the ...
470 views

How to calculate interest rate in this problem?

Problem: A loan of £12,000 is issued and is repaid in instalments of £300 at the end of each month for 4 years. Calculate the effective annual rate of interest for this loan. What I tried- But ...
93 views

Value of a continuous cash flow until a random time

I am trying to compute the present value of a continuous cash flow that lasts until a random time. The rate of the cash flow is denoted by $c$ and the random time is denoted by $\tau$. Then my claim ...
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Given cash flows, what is the interest rate of the following contract? [closed]

I am presented with an investment opportunity where I am given #481,000 on day 1. Thereafter, every 10 days, I am required to give back #50,000 every for 100 days (10 * 50000 = 500000). How do I ...
2k views

Why is my YTM incorrect? How does accrued interest play into Yield to Maturity?

I'm writing some software that includes a feature to calculate Yield to Maturity for a Bond. I'm using an HP 10bii Financial Calculator to double check the answers produced by my software. I'm running ...