The University of the South Pacific

Serving the Cook Islands, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Samoa, Solomon Islands, Tokelau, Tonga, Tuvalu, and Vanuatu.

SCHOOL OF ACCOUNTING &

FINANCE

AF208 FINANCIAL MANAGEMENT

(Print Mode)

FINAL EXAMINATION
SEMESTER 1, 2015

Time allowed: 3 hours plus 10 minutes reading

100 Marks (50% affinal grade)
INSTRUCTIONS
• Silent non programmable calculators allowed but not supplied
• Multiple choices to be answered on sheet provided
• All questions are compulsory
• Minimum mark for final exam is 20/50
• This exam paper has a cover page + 6 pages of questions

Marks
Section A:
20 Multiple Choice 20
Section B:
Question 1 Cost of Capital 20
Question 2 Capital Budgeting 20
Question 3 Short term/Long Tenn Finance 20
Question 4 Capital Structure 20
100
Section A (25 marks)

MCQ's - Please circle the most appropriate answer on the answer sheet provided

1. Which of the following is not a source of capital?

a. Borrowings
b. Preference shares
c. Ordinary shares
d. Trade credit

2. When calculating a firm's weighted average cost of capital, the preferred method of weighting each
source of capital is to use:
a. book values
b. amortised historical costs
c. current market values
d. target weights.

3. A firm is financed using one-third debt and two-thirds equity. If the cost of debt is 12% pa and the cost of
equity 9% pa, the firm's weighted average cost of capital:
a. 10.5% pa
b. 1O.0%pa
c. 11.0% pa
d. 11.5% pa

4. The main difference between estimating the cost of new ordinary shares and estimating the cost of
retained earnings is the use of:
a. net proceeds rather than book value
b. net proceeds rather than intrinsic value
c. net proceeds rather than current market price
d. retained earnings per share rather than current market price.

5. If the before-tax cost of debt is 20% and the tax rate is 40%, the after-tax cost of debt is:
a. 3.00%
b. 7.00%
c. 14.29%
d. 12.00%

6. A company's share price is currently $5.60. Its most recent dividend was 60 cents per share; dividends
are expected to grow indefinitely at a rate of 5% pa and the tax rate is 40%. The company's before-tax
cost of retained earnings is:
a. 19.74%
b. 23.13%
c. 23.75%
d. 22.72%

7. Which of the following assets is likely to have the highest loan-to-value ratio (LVR) as security for
short-term finance?
a. Vacant land in a non-residential area
b. Inventories of fashion goods
c. Existing trade receivables
d. New invoices.

8. A project has an initial outlay of $400000, annual net operating cash flows of $75 000 for eight years
and a terminal value of $60 000. If the hurdle rate is 10% pa, the project's net pres ent value (NPV)
IS:

a. $28 110
2
 b. $428 110
c. $119
d. $400 119

9. The price for which the owner is willing to sell the security is called the:
a. bid price
b. spread
c. ask price
d. limit price

10. If a firm has positive net working capital, the current ratio is:
a. greater than one
b. less than one
c. equal to one
d. not enough information given to tell

11. Which one of the following is not a primary market function of investment bankers?
a. originating
b. underwriting
c. selling
d. making loans

12. Which one of the following is not a cost to the issuing firm of going public with an initial stock offering?
a. direct costs (legal fees, accounting fees, etc.)
b. underwriter's spread
c. overpncmg
d. underpricing
13. In calculating the cost of new common stock using the constant dividend growth model, it is important that
the are subtracted from the price of the stock.
a. flotation costs
b. par value
c. cost of retained earnings
d. proceeds of the sale

14. As a general rule, the capital structure that:

a. minimizes the cost of equity also maximizes the stock price
b. maximizes the stock price also minimizes the weighted average cost of capital
c. minimizes the cost of debt also maximizes the expected earnings per share
d. none of the above is a true statement

15. Which of the following is not a reason to use factoring services?

a. it is a form of credit insurance
b. it eliminates overhead
c. management is freed from concern with financial matters
d. lower cost

16. Ofthe four options listed below and encountered in project evaluation, which one is most likely to make a
project seem less attractive?
a. underestimating negative cash flows
b. overestimating positive cash flows
c. using a higher cost of capital
d. ignoring the time value of money

3
17. A firm purchases on credit. Credit terms require settlement by the end of the month following the
month of invoicing, but a discount of 2% is offered for settlement within 7 days of invoicing. The
firm decides to take the prompt settlement discount on all invoices received after the 20th day of
the month. What is the cost of forgoing the discount on the other invoices (assuming an average
credit period of 50 days)?

a.14.90%
b.15.89%
c.14.6%
d.15.55%

18. Which of the following costs must be adjusted to an after-tax cost?

a. cost of debt
b. cost of preferred stock
c. cost of common stock
d. cost of retained earnings

19. Ifa firm has total long-term capital of$I,OOO,OOO, preferred stock of $500,000, preferred dividends of$10
and preferred stock price of $1 00, the weighted cost of capital for preferred is:
a. 50%
b. 10%
c. 5%
d. cannot tell from this information

20. In calculation of a payback period, what use is made of cash flows occurring after the end of the payback
period?
a. They are ignored.
b. They are discounted back to time zero.
c. They are included in the accept/reject decision.
d. They are normally canceled by initial negative cash flows

4
Section B:

Question One (20 marks)

The before-tax marginal costs of each source of Damodar capital are:

Bonds 8.6%
Convertible Preference shares 12.5%
Ordinary shares 14.5%
Damodar's target weights for each source of capital are:
Bonds 26%
Convertible Preference shares 20%
Ordinary equity 54%

Damodar is evaluating a proposed project costing $60 million with corporate tax rate at
20%. The project has the same perceived level of risk as that pertaining to the
company's other investments. The company has $10 million of retained earnings, the
cost of which is estimated to be 12.0%. The $8 million is in the form of liquid assets
that will be applied to the payment of a special ordinary dividend if the proposed
project is rejected.
(a) How much of each component (i.e., Bonds, Preference shares, etc.) is expected in
order to finance the proposed project? (8 marks)

(b) What discount rate should the company use to evaluate the projected cash flows of
the proposed project?(8 marks)

(c) Why is the marginal cost of capital more relevant to making investment decisions
than the historic cost of capital? (4 marks)?

Question Two (20 marks)

You have been asked to evaluate a proposal for the Bamboo Traders Proprietary Limited. The
Directors of the business, Mr. Timoci and Mr. Lulu have a marginal tax rate is 47%. They
have given you the following information about the project:
• it has a 5 year lifetime
• the installed cost of the proj ect will be $250 000
• the tax office gives this type of asset an effective life of 4 years
• the asset will be sold at the end of the project for an estimated $20 000
• sales of$90 000 are expected in the first year of the project
• sales will grow at a rate of 5% p.a. for each year of the project
• cost of goods sold (excluding depreciation) is expected to be 30% of sales
• the owners required return is 8%

5
A.) Using NPV, advise the directors of Bamboo Traders Proprietary Limited on the
acceptability of the project. Round your calculations for each cash inflow or outflow to
the nearest whole dollar (12 Marks)

B.) Why are lost sales included in the calculation of after-tax cash flows? (2 Marks)

C.) Provide two factors that can create ranking problems among mutually exclusive
projects? Explain each factor and show how the associated ranking problem can be
overcome. (3 Marks)

D.) Give two non-discounted methods of project appraisal and list two benefits of using such
approaches (3 marks)

Question Three (20 marks)

Part A:

A) Explain the trade-off between risk and return in relation to holding enough cash? (2
marks)

B) What are the three assumptions underlying economic order quantity (EOQ) theory? (3
Marks)

C) List three management techniques used by financial managers to assist in inventory

management? (3 Marks)

Part B:

Ali's Engineering Ltd need to acquire new equipment and it can either take a loan or have a
lease option. The loan funds of$100 000 at 8.2% p.a. after tax, compounded semi-annually
for 2 years. Ali's Engineering has 3 Directors in the business and the directors pay
individual income tax at an average rate of 35%. FIRCA (i.e. Tax office) allows
depreciation at the rate of 50% p.a. on this equipment. Advise Ali's Engineering Ltd which
is the better deal, the loan or a 2-year lease with four equal payments of $26674 starting
with the first payment at the signing of the contract. Assume that corporate tax rate is 28%
for simplicity's sake the tax benefits from each lease payment and the tax benefits forgone
for depreciation are received without time lag in each half-year period.

A) Which method of financing would you recommend? (Hint: Show analysis of cash flow)
(9 marks)

B) List three potential benefits associated with leasing? (3 marks)

6
Question Four (20 marks)

Part A:

Ben Ryan Co Ltd has 10 million shares and $600,000 of debt (issued bonds @ 7% pa). The
company plans to expand and increase EBIT from $2 million to $3 million. The company tax
rate is 20%. Preference shares pay an annual dividend of $100,000. To fund this expansion,
management is considering two options:

Option 1: The Company would borrow $4 million at 8% interest rate and use the proceeds to
buy back shares of 2 million shares at the current market price of $1.

Option 2: Company can raise $2 million by issuing new shares at the current market price of
$1.

(a) What is the current EPS for shareholders? (4 marks)

(b) What will be the EPS after the change in capital structure under option 1 and option
2? hint: show full workingfrom EBlT to Net Profit (10 marks)

(c) Does it make sense for management to go ahead with either of the capital restructure
options? If yes, which of the two options is EPS accretive? (2 marks)

(d) What are some limitations ofEBIT-EPS analysis? (4 marks)

7
Tab I.. 1

Future value: of $1 at the end of H periods = U + li)1f Future value: of $1 at the end of n periods::; (1 t Ii)ll

" Compound ing rutc Compounding tall' "

I'}'; 2% 3, . . .'0 4% -"I 5(1!~ -I 6% 7% 8% 9% 10% li~'"i 12% 13% 14% -'--15% 16% 17~o 18% 19% 20%
I.oj 00 . .L0200 1;0300
1.0400 .•... 1:~3~.~: . ~:~)~i>~~f>~·'!:07~·O~ ...f:"'i~?~o.~ .~. :..I:09~O •.... i.IOOO l2BI~~;~~~fiw.JE~:~::~rl~£:~::z~~:~~::~~~~t~~~J:l}t~~;;~~~~t~t%f~)!iIjjf2\J~f~]zf~W~~Ktl

4
1.0201

1.0406
1.0404

1.0824
1.0609

1.1255
.
C~~.~~.:1~Q~O(: ...:1:96I~~: . :=~~~~~ <,.~~!~~9 ....... ~J57(~ ... l.:~.9i?:.. ·..-.}:.~~~.O.•...
1.0816

1.1699
1.1025

1.2155
1.1236

1.262S
1.1449

1.3108
1.1664
1•.2597
1.3605
1.1881
1.2950
1.4116
1.2100
. 1.3.310
1.4641
1.2321
j;3676bi049

1.5181
1.2544

...• ~,- . ~- .. ~-.~.-:~--.- ....

1.5735
- _
1.2769
t4429
.-.-~ ~.-.--.~-

1.6305
1.2996

1.6890
~".- ~
1.3225

1.7490
1.3456
. "<ISiS' '.' i:Sio!l . :·;;$6~9~"··i~60j6· ":':I~~43~'-'~:i~t;a52' """i::1ta~'-'~i:
-_._." ......... .... -...:..-...--:... ...... -.-" .. ..
1.8106
~ ~.~. _
1.3689

.......__.. --"'- .,_.. --....._. _... .. -.-..

1.8739
. -.....:.;., .. --
1.3924

1.9388
...
2.0053
.. ..•--.
~
1.4161

2.0736
,.--~
4
-~;..:

.. ..,... .... .. 'f

~"
1.4400

~#_.~
--~.

~~
2

-.~

:. 5
.'·~~1° .I.IO~, .....1.159.3' 1;2,67 1.2763.___ ;: 1,3382 . 1.4026 ).4693 1:5386.' ..1.6105 ··1.68!;1 .: 1.:~Z3 . tll424 Mt54 2.0114. ' 'i:iOOl. ·2:1924 2.2878' . ':2.3864 2AsU S;
6 1.0615 1.1262 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.8704 1.9738 2.0820 2.1950 2.3131 2.4364 2.S652 2.6996 2.8398 2.9860 6
.. ~ .. ~-~- .---~

'7 .1.072.1
1.1~~~__ ., J.:~~~_9....... J.:~15~.: ... :~1:4~7.1 ., .. ,
1.5036
.~.!.. ...... .' .. :. -
1.60.58 1.7138 i,S2S0 ..1.9487 2.0762 ·.:i:il07 2.3526 2.5023 2:6600
.,_.,.~,.; _ _ . . _ .
2:82:62 3.0012 • 3-i85S 3.• 3793
_ _ . _ . _ • • • • • • _ . _ _ _ , ' ... _ . __ .~,~_.,_ . . . . . . ~ •• _ . _ _ ~ •• , , # ,r ._~ ••• _
3.5832'1
•• _ : • ..:....: _ _·_._1

8 1.0829 1.1717 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.3045 2.4760 2.6584 2.8526 3.0590 3.2784 3.5115 3.7589 4.0214 4.2998 8
, 9
1,0~3~ .. : 1.1951 1.3048 1.4233 1.5513 1.6895 . 1.8.385 1.9990 . i.:j;;;;"· .;'35;9'; ·2.5580 . '2,7731 .- l.aMi! . '3.•25'19 '.3,5179 . 3.80l0 4.108>1 .(4355 4.7854 '5.1598 .9 :
10 1.1046 1.2190 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 2.8394 3.1058 3.3946 3.7072 4.0456 4.4114 4.8068 5.2338 5.6947 6.1917 10
.....................
U157
.....~:1~~.! .....'~=~!.s.~. __ . .'.~;~~~?:. ._~:22.6.: ",,"~:4:~~~ ._.:. ~:~1!.~.. __ .:!:~2!~~ .•• ~~fi-~.:~~.. :." .~:~~!___ 2t-:?~I_~,!..,!
He 1.2-'134' . '1.3842 1,53.95 1.7103 U98.~ 2..1049 ,2.3316 .~:.~~~~;' ·._2.~5.~t.:
12 1.1268 1.2682 1.4258 1.6010 1.7959 2.0122 2.2522 2.5182 2.8127 3.1]84 3.4985 3.8960 4.3345 4.8179 5.3503 5.9360 6.5801 7.2876 8.0642 8.9161 12
13"' ',;.ha;·· 1.2936 1.4685 1.6651 1.8856 .2.1329 .' 2.4.0.98 . 2.7196 l;0651i .. ,~.'3.4523 3,8833 4:3635 4.8980 5:4924 6.1~2ii 6.8858 ··i.6987 '1i~5994 : '.9.;5964 . 10;5993 '13 .
---_._.._- -- --' .... ', •.. -. -~-- ,.,-_... -.. _. __ ..... - . ..:.--- -~.---.-..:.-... -:.-:.. ......-.;

14 1.1495 1.3195 1.5126 1.7317 1.9799 2.2609 2.5785 2.9372 3.3417 3.7975 4.3104 4.8871 5.5348 6.2613 7.0757 7.9875 9.0075 10.1472 11.41118 12.8392 14

i. .1.~ ~_.~:~~~~.~c..:~~.:~~,~ ...~._:!:?JS.0 1.8Do9 2.0789. 2.3966 2•.7590. 3.1722 3.6425 4.1772'" 4.7846 5.4136
................... . 6.2543. ,. 7.1379
---'- - ..... _._--_ . _--_._ .._-_ . .'._ ......
8,131'1 IU137'i3:S895
.9.-2655 . ·10.5387 . ____ --.15.4070'
.... _... ____....... "., ......... _ .• _... _"......... -J5.;
16 1.1726 1.3728 1.6047 1.8730 2.1829 2.5404 2.9522 3.4259 3.9703 4.5950 5.3109 6.1304 7.0673 8.1372 9.3576 10.7480 12.3303 14..1290 16.1715 18.4884 15

:.:~~=2-~~~' -·~~{~~=''':T~?28·.·· . .~.~~?s.....

18 1.1961 1.4282 1.7024 2.0258
2.2920
2.4066
2.6928
2.8543
3.1588
3.3799
3.7000 .;~.~2!6_ .. _.!J5,~~.~, . 5.8951 6.8660 .7;986t 9.2165 10.16)-3
" _ . _ . ' _ •• M •• _ '"
'12.4677
_ _ _" . " _ . ' _ . n ••• _
'14:4265'
• _ _ ........ o'
'16.6722
_ . . _ •• _.~ .~ _ _ _ ,_ . . "'~
19:24412iM8~1:.-
.... .:~ • • • • • • • • • ~:._ •• ~.;.~ • • • _
1.7 '
~. _ _ , _ •• , •• ,

3.9960 4.7171 5.5599 6.5436 7.6900 9.0243 10.5752 12.3755 14.4625 16.8790 19.6733 22.9005 26.6233 18

f)f~ll~L~·~:\It~,~E.;::~~S!~~·· 2.)068 2.5270 3.0256 3.6165 4.315i 5,I"i72::~~6~1;;~'1

.. -- ......._. __ .. ; .............._-' .7.2633
_d~5128·10.l974
........... ,' ·__ ..".. ~._.w.
12.0557 i4.2318 ·ii7i6S"·19.7484 23-.11144il7;;Z'5f1i' : ·'3'i.9irllo"f9'
.~ ........... .....:. .. ,.:..~- ..... :.:..;.;..............;...... '-"~'-
' -
20 1.2202 1.4859 1.8061 2.1911 2.6533 3.2071 3.8697 4.6610 5.6044 6.7275 8.0623 9.6463 11.5231 13.1435 16.3665 19.4608 U.l056 27.3930 32.4294 38.3376 20
-' ..... --....-.--:.-. -............... .. .
6,8485.. ·.·~:~6~... _~~~~~~¥&J
~ ~

25 '. 1.28i4 ., '\;6'406' '2J)938· 2.6658 3.3864 . 4·.2!n9 SA274 I!U85517.0oin 21.23'05 '26A619 _~ ·32.g190liO;S'142.... __ ,,~,,_
50;6578 '62.5686 ·7'1.3881: "'!i!i:3962 is
.. --' ---.. ~" ... :.:.- .....- .. -~..:....::... -:.:. ...-..... -.~.-'-. L._ "'.~_"""_' _._~_
___ --'- _._ ... ....... ___ ........ , ... __ . _ _ , . . . . . . . . . . •••• _ .. __ ._.__...,. __ •. _.'.!l •• ~u_ .. _._.. ___ .'~"'_"'" ""'#' _ •• ~.,;": =.....:_ ........... ..: ___ ._._.:... -.. ..
___ , _ ....

30 1.3478 1.8114 2.4273 3.2434 4.3219 5.7435 7.6123 10.0627 13.2677 17.4494 22.8923 29.9599 39.1159 50.9502 66.2118 85.8499 111.0647 143.3706 184.6753 237.3763 30

,- 3$:~~.-'I;~:~K:~:~~:=·: i~i39.::~. _3.~~~~~·~.· ···~;~1.6~-.:·.·.~·~.~~61

40 1.4889 2.2080 3.2620 4.8010 7.0400 10.2857
10.6766
14.9745
'4..
21.7245
7853.~~~~.j~ ..'·'2~:I~~El
31.4094 45.2593
38.:;749'
65.0009
~2.7996
93.0510
12~bi;85

132.7816
98.·1M2
188.8835
13il7SSi80.314r
267.8635
........

378.7212
" ." ..., .. _.- ......__ .•.... -.-..

533.8687
... ..
243.5035 32];9913 4.40;1.boi; .59ci~6682
---~--

750.3783 1051.6675 1469.7716

3~:
----'_·--0-- : _~ ........ _._ .._____,...:. __ ..... _~ ..... ,_.~ __ :_. __ .__ ~.. ..: .. ..:. ........._.. .:.._.:..:.~._... :.........:'....... _ •.•• _"
---
40
45 i.5648 ·~.~379
_ _ _ ••· _ _ · · · _ ... •· .... _ _ _ r _ •.• _
3.71116'
... _ . _ ••• _ •.• _
5.8412
...•• _ ..... _~ •• ~~_
8.9850
• • __ •. _ _ . . . . . . . . . '0_'
13.~46 21.002~ 31.9204 48.32737;.~~9fl , .•..•.• ~:,...:.....,:..--.:.I
. 109.5302 163·.9S.76 244.64.14 ,3'63·.~791 5.38.7693 79S.4438 1\70.4794 1716".6839 2S09~i;506 3657.2620 .45
50 1.6446 2.6916 4.3839 7.1067 11.4674 18.4202 29.4570 46.9016 74.3575 117.3909 184.5648 289.0022 450.7359 700.2330 1083.6574 1670.7038 2566.2153 3927.3569 5988.9139 9100.4382 SO

734 Appendix I The. lime valu. of money Append;" I The time value of money 735
Table 2

Present varue of $1 received at the end of If periods", -

II + h)"

If DiscolInt rate

T 1% 2% 3~o 4%. 5% ~ 7%~ 8% 9% 10%

o.~~OJ. il,98p4.!!.lmig ';~.9~15 • 0~9~24 O,~434 0~9346. .0.92 59 . 0;917:4: .• J;~o,:i.

2 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 0.7972 0.7831 0.7695 0.7561 0.7432
. -.. ....--.-..•..-.--:--.-.- .. ---., .. ...,-.,....., 0.7305 0.7182 0.7062 0.6944 2
'.~-.-- ~ -.--.-~-.-
: -.'." '". ~ ..
...0•.97.0.6· .0.942.1, .. il.illSI 0.g890 .. 0 ..~.63 8 < .0.S3,96 .-Q,7!l.38· '0.]'122 ,q ..Z~13.. ., ..0:6~~O O.:~57' .. O.~407 . j1~~4 ,~.~9.~4,. ..:~~i!~!,.:~.~=ij
0.8).63. .0.73j2 ·O;7iI80.6931 ' '0:6086
4 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718 0.,523 0.5337 0.5158 0.4987 0.4823 4
0.~.5i5 0.9057 . 0..8626 • 0.8219 . 0.7835 .9·:7473 ,0.7.130. . ~,6.S96 .0,6499 M~09 ·0.5935 0.56740:5428 '0:5194 ·OA'9i2 0.4761 (Lhiij
-_ ...... ---. .' . ~,"' .-..~: .....• _" .... _ .. " .l_ ...... . 0:456i 0.4190 0.4019'5 i
. .. ""'~ '-.:--~',~.~.--;.:.~:.:'
6 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 Q.6302 0.5963 0.5645 0.,346 0.5066 0.4803 0.4,,6 0.4323 0.4104 0.3898 0.3704 0.3521 0.3349 6
0,';132 . I.
7 0.9327 0,8706.0 . 8131. 0.7599 ·.0.7107 0.6651 ·0.6227' . 0.5835 0 . 5470 OASl7 ·-0.4523 0.4251 0.3996 0.3759 ·(};3S38 0;279i
.,c.~.!
. ,', .:•...,. _":~: ~ ..•. 'N.~l 0:3332 0;3139 '0,2959
8 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 0.4039 0.3762 0.3,06 0.3269 0.30,0
....."........ '... __ ......... ,....... _~ •. _ •. _____ .,.'"_ .•.,.. .•.__ "_._._.· ....... r·~·.~'._. M'" 'H.,"""~' "_'_~'-:-'." •. ,.....,.._-:-- __ ., 0.2848 0.2660 0.2487 0.2326 8
9 0.9143.. . 0.~368 0•.7664. 0,7026 0.6446 . 0.5919 0.5.439 ·0.5002 0.4.604 C)'4241 0.3909 ·~.'3606 0.3329 '0.3075 '0.2B43 0.2630 '0.2434 . 0;iZ55 0.2090 'O:i93S"9 :
.... -...-......_"... _." •• __ .. ,_ •. __ ,_.-.-i..:•..;,~
10 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.38,5 0.3522
. -.-.__ .. -."'--' ",-"-'- ..... _-------.._._ .. __ .. --: .. -..... -.~ .... -~, ...-.-, .... ..... -.....
~, ~.~.~.".- ..... -..•..-.,.., ... "'" "'-"'-'-"'''''----''"1
0.3220 0.2946 0.2697 0.2472 0.2267 0.2080 0.1911 0.1756 0.1615 10
'n • P'J!963 0.,80.43 0.?~24 . 0.64.96 0,5847 . ; 0.S26~, DAm. D.4.~.89 0'~~75 .. ;~?!i~5 . j , .. O.,.~.I?~_ .• 'O,2~75. 0.2607.. 0 ..236.6
-0;21,,:_ .~,?:!:~~._.~:o;r~:~ ... ?,~~~::.~~:j.~~~.•...•.?j~:~~.~'. ~S;Jj
12 0.8874 0.7885 0.7014 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 0.2567 0.2307 0.2076 0.1869 0.1685 0.1520
.-" .---.~~. ~ .•. ~-
0.1372 0.1240 0.1122 12
1.3 .. 0.'~787· 0.7730 .. . ·0.6810- . 0.5303 O.4.!!88 004150. O.36F 0.3262. ,o'~~,~.~d (f.2575 Q.i2~i".~~.:~.~~2. 0.132.1 . -ii.1~~!i·· 0.1152 0.1299 o.liJi nlti"'· 0;0935 ):3 i
.. .: '_n:~':'" .. ~.~..•.. .;,,~~ .. ~: ...~. _... :. ..,._ .. ':; _ .; .•...'.~_ ..,.... ;~;;
14 0.8700 0.7579 0.6611 0.5775 0.4423 0.3878 0.3405 0.2992
.- _...... -" .. '---~.~-~~, ..••.......... " " . ' " -"~-"--- _ 0.50S1
... _-_._--- . ..• ". __
O.3~24·--O:31s2 ···'Q.2i~5··'·-~O.:2i~'7]
0.2633 0.2320 0.2046 0.1807 0.159,7 0.1413 0.1252 0.1110 0.0985 0.0876 0.0779 14
1~ ·0;8613 .D;6'U.9 0.4810
0.7439. 0.5553 ·004173 0.:2090 .
.~.- ...... ~ ......... -..-...
0.1827
~ ..
,.-, - ... , 0.1599 . o:i401 0.1229 0.1079 0.1)949
... o:~~~,_ .. ;0.:o.7.3:~._. . :?:~~~?.;...!.5i.'
16 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1883 0.1631 0.1415 0.1229 0.1069 0.0930 0.0811 0.0708 0.0618 0.0541 16
. ",-."
. 17 .0'SH4 ... O.7i.4.i 0~60S0 ·0§134 ·0..43.63 0.• 37·1.4· 0.3166. 0 ..2701 ··~o.~al1'~.~·R,;\,~ffJ 0.1696 ti.J456 0.1252 .0.io7s O.1l929 . . 0.0802 0.1)693 ·'0.0600 ·li.ri~7n 0,04si 17
...•... ......-- ...•..-,.,.-, ,.. .....-:.:,: ...-.._-
,.
~." ••• ~ • • • ~ • • ,~. y • • • • • • •
~
,----~~: ..
";,--, -.~... ~"-'~~':';" ... -;' ~
18 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1528 0.1300 0.1108 0.0946 0.0808 0.0691 0.OS92 0.0508 0.0437 0.0376 18
19 .. Oe8p" 0,6864· IJ.S7Q3 .0.474.6 0.3957 0.3305 0.2765 0.21)7 . ,o.:i9~4~~~:i~~~~JLJ ·i.l.l377 0;1161· 0.o9ill 0.0829 0.0703 . 0.0596 0;0506 0.0431 0;0367 0:O]i3'19i
,.~,- .•• :,•. -.~. -,_ .........~<-'" ; .•... ~:.,- ..~ .•..• :.;-.~._.,._ •. :~ '.. ;,<:.:'.:.1..:___ ~~ ...:
20 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1240 0.1037 0.0868 O.072S 0.0611 0.0514 0.0433 0.0365 0.0308 0.0261 20
25 Q:;?9a".... ·-O;~O~;····'··ii:4i76··---o.1;~i-··-·o~2,'~r· ·:·~,2~~O-----·Q~i;4~---~~;~·69'·~.~:;16:?-·~.~·-.~~:§¥m 0.0736 0:0588 p..Oilll ·.0.0378. 0.0304
..
0. 02.45 0.Di97 0.0160 O.• Oll9 0.0105 25·
30 0.7419 0.5521 0.4120 0.3083 0.2314 0.1741 0.1314 0.0994 0.0754 0.0573 0.0437 0,0334 0.0256 0.0196 0.0151 0.0116 0.0090 0.0070 0.0054 0.0042 30
35 Q.7059 ·Q.5000 0.3554 0.2534 0.181.3 ··o.lial ··-6:.0.~~~·_·:··· O;067~:··.·' .···~.~~~:?-·~~Z~?!i?£~ . ' 0.0259 0,0189 . 0.6L~9 . 0.0) 02 ·0.00.75' 0.0055 0.004r 0.0030 0.01)23 . 0.00f7 35:
40 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0154 0.0107 0.007, 0.0053 0.0037 0.0026 0.0019 0.0013 0.0010 0.0007 40
45 0.6391 0,4102 . 0 •.26.44 0.)712 MIl3 . 0.0727. :Q:·O.:j7S--·" O:q3l·3··· ..~o:q~??;:·.:B:~;]~ ·0 •.0091 0.0061: 0.0041· ".ooi? 0.0019 0.O0l3· ·0.0009 '0;0006 0.0.004 0.0003. 45 ;
l:; •. ;.~ ..••:,;
so 0.6080 0.3715 0.2281 0.1407 0.0872 0.0543 0.0339 0.0213 0.0134 0.0085 0.0054 0.0035 0.0022 0.0014 0.0009 0.0006 0.0004 0.0003 0.0002 0.0001 50

736 Appendi~ JThe time value of money

Appendix J Tile time value of money 737
,Table 3
In this table It 15 assumed that the payments are received at the end of each period.

Future value of $1 received per period for u periods = ~~~-~ Future value of $1 received per period for n periods = ((1 t k)"
],
1]
h

Compounding rate Compounding rate tJ

-~r-----;:::-I'-- 2%-~1- 3% T~---~ &% - , - - - - - - - - , - - - - - - - , - - - 10%
.=11% ~-l~ 13% 14%'-;~--;5-;Z;-;~;:- 17% 18% l 19% 20%

f' i : l':.. :onOo' ...''3'1.0000

, ",'
1.6000 . :I:,~.?~O ,-i.(ji)oo
- .. .... . ..- ..:..;, .:. -.,';''': .
' ,:.~:;.: .:, -.;:.".:: ; ' .. ..:
-' ..~, '.:
1:~OIi!l9 1;\lOOQ' rOOCO -. ~1:~~~,H?g?; l.·.·~~~~~~t:)'?:g~d~~~j'~:I~g1~p~:::?~~l62A~J!;;~~??:6~!:;:::·:~)E~~~~TEifl?!~@I:;§'f!~Jg9~~::,~5f"~?~6y'?~}(~9gp(F)~j;C:
2 2.0100 2.0200 2.0300 2.0400 2.0500 2.0600 2.0100 2.0800 2.0900 2.1000 2.1100 2.1200 2.1300 2.1400 2.1500 2.1600 2.1700 2.1800 2.1900 2.2000 2
,_. '" '.... ---_._,,_ .. - ...-...- ... - .. ."' --...... ..... --.- .",
. ~ ;3:i4~;·:.~~;~.~;~~~f·. . .·~ib:;~=~=~~~~~._._.~:~.:4?~!.~. ·~·.:-.~~~~~!T~::;·~!~~. ·:.-·~3:·~!~L-~-,·3'~$~i;::~~.~~~~W:Il
-.~.-~-,- ~.- >~--

, 3 -3.0301 3.0604 _3,0909 3.1216

.. , . " .. :,... -.~- ....; - ... -.". 3:_1~2;. :pm 3.214~ . '~:~4i4 3.. 2781 i3100:

4 4.0604 4.1216 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7097 4.1793 4.8498 4.9211 4.9934 5.0665 5.1405 5.2154 5.2913 5.3680 4
..-... -....-.. -.-.... ,_. -....-.-..--.--..
5.101.0 5.2040 .p.091 .5,4163
~:~'ii6---·5:63·ii
5.7507 5.. 86~6 .... ~~-;~~~1---'"6J9';;-' . .
'-~i;~~2·~~:~~'~6.~.~~~ :~:.·:X~~~~'~~~~:i~O~;~~.~~::i.:!.~24:.-~ ~~~,!?IC:·~;~p.~~,·:.~·~ ·?;h;;~~~~.~-l~,~~·:.~.~:_,?:~4!6._: ~L
6 6.1520 6.3081 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 . 1.1156 7.9129 8.1152 8.3227 8.5355 8.7537 8.9775 9.2068 9.4420 9.6830 9.9299 6
..." ..-.'"

.·9.783.~~:·j~~~~O·,,:;E2~~!~.:::i?!~~~ '-_::!~ :~~6.~ . . . ~!:.~~~7,~~:Ei~~::_ .-. )·~,i~. ~·:~ . ~.-~~~;~3~L::.·:~~i5E=!'_;

' -.~.-----.--

L ., 7, 21 35 ]A343 7,6625 7,8983 8.. 1420 8.3938 _____ ~:~~~tl . ,8:9228 ... ,~:~004 ._.. _~:W2 ;
8 8.28S7 8.5830 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 11.8594 12.2997 12.7573 13.2328 13.7268 14.2401 14.1733 15.3270 15.9020 16.4991 8

-9 9}.68.~ ___ .. :.!S16 1p.1,59 I H),582.8 11.0266 i! .49.13 .11:9;i;;'--ii.~~7~·':·i·~·?~;~~:.-:·!~~~~El .'" ··14:-16~·~.·.·~ ::I~~1:1.5i·~:~:~l~i:~:~!~;~¥~~.j~:~i~~~~._~I;~1~E:=2Ii:~iiiL::~}~:~~·~~.~::;!~J~~~~.~;Zi?ffi.k]0E~]
10 10.4622 10.9497 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 16.7220 17.5487 18.4197 19.3373 20.3037 21.3215 22.3931 23.5213 24.7089 25.9587 10

:':1 ;::'.'1 ...

i:?~~r j,2;:!~~1.·.--··-iI8~i$·· ·i3A-86~· _ -'-'~~:;~~8":::i~:~;t~:. -~:5:i~~~·~_~{i.~~:~5-'~i~}~~i~:~:j~~~~~~] i: . ~~~f8:,,~~:~?::~5~6,-;~~'~~~;~lt~·~-··~~;Oi~~:.·:~~~:::~~~-'. =~S~?i~~~2~i~i:_ .::.~~:~~,SJ~::.~;~2~1?1~=;j3}i~~t,!Kj
12 12.6825 13.4121 14.1920 15.0258 15.9171 16.8699 17.8885 18.9771 20.1407 21.3843 22.7132 24.1331 25.6502 21.2707 29.0017 30.8502 32.8239 34.9311 37.1802 39.5805 12
)~C--:i3:S~1r-" ;4:;&03'- 'i5;6il'i-";6~~6,8
14 14.9474 15.9739 17.0863 18.2919
17•.713.0

19.5986 21.0151
~O:i406- "';1~~9;;-" -2"2:~~~~--;.~'3~:J;~!j
22.5505 24.2149 26.0192 27.9750 30.0949 32.3926 34.8827 37.5811
.
r·:-~~~iJ:~=~j~~~~~(=:~;~~~~~.:·::~~~~~~i' -.·~~:3,~i~·~·~:t~:~~~~;~"r~~i~g~::.::~;2:i~!:-.=~~~i3~q:I~~H~:j~~:~Z~n
40.5047 43.6720 47.1027 50.8180 54.8409 59.1959 14
["0. -:-;.. -.. ''','- '''''''-::":"'71
IS ,)6.096\1 iiz934 ... ,._; •. 20.0236 21.5786 23.2760 25.)290.. 2_7:1:S~1 .....2~~~~9 .. _:JE!?l.~j : .• ::3~;4~S_~·:·::.3~~~:~~i:~:~O'EI~~.·:.·:~?:~~~4.~-:~J~~~:~·.:_~1:~~_~~~·'.·:::_~:~;:~~~~::. :."to:~6.~~.·~:_i~:~~i!: ·~~:.~~§~iii~5~~j
16 17.2519 18.6393 20.1569 21.8245 23.6575 25.6725 27.8881 30.3243 33.0034 35.9497 39.1899 42.7533 46.6717 50.9804 55.7175 60.9250 66.6488 72.9390 79.8502 87.4421 16

17 18,4304 20:0]21 2P616 2~,6975 25.8404 28.212.9 3P.84q2 33.7502 36:97i7.·:;·1[S,~ttl _. -4:.~5:~f:~~~:~~.~i::,.::~~:i~~i=)~~i~ii:~ .·::::·~~~i~~i.~~-i~~i~ri~:~:.~7E;~~!2~_·~·~~;;~·~~fL:;~~~~ttL~p£~iq6c,;·~~1
18 19.6147 21.4123 23.4144 25.6454 28.1324 30.9057 33.9990 37.4502 41.3013 45.5992 50.3959 55.7497 61.7251 68.3941 75.8364 84.1407 93.4056 103.7403 115.2659 128.1167 18

1.9 22:8~~6'" ·;~·.;'69 . . -27:67,;""30'-5390" 3~:7~;;O'''' 3"7.-;-7;0'" 4;:~~63 :46:Qjs.<-'::~!~lill f.-.~~~~.3;Q;··~:~i:i§~~.~ ..rE4J~~ .:.·ifi~~2..:.i~:?i!~:~·:~:~~~i~:·. _.1. iO~2!~L_~.i~3;il~~":j~~i~~~r:·.:~~~i~~~:=i~·J
20 22.0190 24.2974 26.8704 29.7781 33.0660 36.7856 40.9955 45.7620 51.1601 57.2150 64.2028 . 72.0524 80.9468 91.0249 102.4436 115.3797 130.0329 146.6280 165.4180 186.6880 20
---, -..--...,-'-.,.--- ---- ..... -.--- --,,-,,----'... ,----.. ---:-,. -- "'-..",.---.---,,-.-.-.-""'''-..... ---""" -.. -·-----·:"·-·-'-"--"~r:;ol

25 28.2.432
""",. _ ...•• :;.•.... ,..
32.0303 36.4593
",
41.6459
... ~..
47.7271
'.
54.8645
....
63.24911
'._~" .•...• ,~.,.. .:
73.1059 84.7009 :~_8,3""71q
., ...... _....•. ~ ...,.~.~.~.;>~~. ___ .;,~t.;:~.:.:;:ll f~~F~I~~:.)3~:i~:.9.• ~l~~~,~~~~~~~E~??!.·.·~~:~~;~?Io.:: . !.~~~~.~~~:_.~~~.~.~~~~. ,~~2;:~O;~~=.-ii2:~~~~~i~:~jiS~E3;!·j
30 34.7849 40.5681 47.5754 56.0849 66.4388 79.0582 94.4608 113.2832 136.3075 164.4940 199.0209 241.3327 293.1992 356.7868 434.7451 530.3117 647.4391 790.9480 966.7122 1181.8816 30

35 41.6.603 49.9945 6.0.4621-;3 :6522" "9~:32;;3""" ;i-l.~3,~~-:i:~8:~369- . ;;2~3~i~8- '2i~;~~~~~·. 2rs?itti [.~il:;~S~6_ -.~3)~~i~~~·:·S~f~~~~. :.·~f?~2;;·:·~~Eii?2::·I2-~~i~~.:.~~~~~;;i9,1·0···.'~i~~~:~il~·;··t3i~:~Ej9.ii~~)=f.~;~L
40 48.8864 60.4020 75.4013 95.0255 120.7998 154.7620 199.6351 259.0565 337.8824 442.5926 581.8261 767.0914 1013.7042 1342.0251 1779.0903 2360.7572 3134.5218 4163.2130 5529.8290 7343.8578 40

4S 56.4811 71.8.927 92.7199 159.1002 2~;.7~35--28'5:7~9.~--' 38.~:~956-52~·i~87-·.. :~f§.;~~ L•.?~~:~38~.I~~.8.;2~~~·I~f~~~~~~5~~:~~~~.~S8::::I.~~~··.~~~5~!7~~-:~~~!~??1. . :.S?J~~~71:· ~~2~i:~~~t~ 1~;~;~3?~~.:~~i
: .....
so 64.4632 84.5794 112.7969 209.3~80 290.3359 406.5289 573.7702 815.0836 1163.9085 166B.7712 2400.0182 3459.5071 4994.5213 7217.7163 10435.6488 15089.5017 21813.0937 31515.3363 45497.1908 50

738 Appendix! The time value of money Appendix I The time value of money 739
Table 4
In this table it is assumed that the payments are received at the end of ••ch period.

Prese.nt value of $1 received per period for" peripds;; (J -- (1 t k) ~1

k

" Oiscou nt rate

~:-- -~"-i~- 3% 4% S% 7% 8% ~ -r- 10%

(MISOI '0;9804 •.' 6.971l9.9:9615 0.9524 0.9434 '0;9346 0.9259 -"0;9174' '()jiOSl

2 1.9704 1.9416 1.9135 1.8861 1.8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.5852 1.5656 1.5465 1.5278,,2

3 2;9410 2.8839 2.8286 2.7751 2.723'2 2.6730 2.6243 2.5771 2.5313 2.4869 2.4437 ~.4018 .2.3612 2.3216 ..... 2:~83.: .. _ . ,r.~1~9 2.20962.1743 .2;1399~:.I.~ij§~~
4 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.1024 3.0373 2.9745 2.9137 2.8550 2.7982 2.7432 2.6901 2.6386 2.5887 4

4.8534 4.7135 4. 57 97 4A518 4.3295 4.2124 4.1002 3.9927 3.8897. 3.7908 3.6959 ·3.6048 3.5,172 M33, 3.,3522 .:... ,.:E:4~... , .~.~!i~~.......·~:1:~.7.___ ,. },,?,5.~~, .... _.2:?~~E·~:d~~
6 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4,3553 4.2305 4.1l14 3.9975 3.8887 3.7845 3.6847 3.5892 3.4976 3.4098 3.3255 6

7 6.7282 6.4720 6.2303 .6.0021 5.7864 5.5824 .5.3893 5.2064 5.0330 4.8684 4.7122 4.5638 4.4226 4.2883 4.1694 4.0386 3.9224 3~8i15 3.7(j57".:~~~~~~~~.;-i~J
8 7.6517 7.3255 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 5.1461 4.9576 4.7988 4.6389 4.4873 4.3436 4.2072 4.0776 3.9544 3.8372 8
9 8.5660 S:1622 7.7861 7;4353 7.1078 6;8017 ,6.5152 , 6.2469 5.9952 5.7590 5..5370 '5,3282 5•.131.7 4.9.464 .(7716
.
4.6065
~<:.o ~":"_'·.L ___ T
H~06 4.3'030 ... : ._~'r6r3_ .•.. ~~~io_.:~~I~
10 9.4713 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.8892 5.6502 5.4262 5.2161 5.0188 4.8332 4.6586 4.4941 4.3389 4.1925 10
5,4~ii 5..2H7
II 10.367.6 9.7868 9.2526 .8.7605 8.3064 7.8869 7.4987 7.1390 6.8052 . '6.4951 6 ..2065 ' • .s:~3F .5.6869 . 5.0286 4;8"364 . ,4';6560 40'4865
c1·a.~!I.~: .~}J_.-,
12 11.2551 10.5753 9.9540 9.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.4924 6.1944 5.9176 5.6603 5.4206 5.1971 4.9884 4.7932 4.6105 4.4392 12

13 12.ll37 11.3484 .1.0..6350 9;9856 9.3936' 8.8"527 8.3577 7.9038 7.41169 7.1034 6.7499 6.4235 6.1218 5.8424 5.s8~1 5.3423 s.liB3 .,4:~~9:5_, ._~:':)~~.,~._4;~3.3~. ,••j~~1
14 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.9819 6.6282 6.3025 6.0021 5.7245 5.4675 5.2293 5.0081 4.8023 4.6106 14
"'1
15 13.8651 12.8493 n.9379 11.i1S4 10.3797 !U122 9.1079 8:.5595 7.1909 6.8109 6.4624 6.1<\22 5.8474 5.5755 5.• 3242 5.0916 4.8759 4.6155 ,.,' '15
8.0607 7.6061' ,". _
--.-.- ..-~-.. --- .. ,~ --:,:,:,:",--.--,.~,,:.; .....'
16 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 7.3792 6.9740 6.6039 6.2651 5.9542 5.6685 5.4053 5.1624 4.9377 4.7296 16

17 15.5623 14.2919 13.)1>61 12.1657 1l.274i 10.4773 9:7632 9.1216 8.5436 8:.0216: .: 7.5488 7;i196 6.7291 6.3729 6.0472 5:7487 ' 5.4746 5 ..2223 ·'~:989~-··,iiii~~,~~--ii.]
.~-.; .~:':',-: .... - -.•.~.-.
,", , ,;_ ....... .,:....... '
IS 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.7016 7.2497 6.8399 6.4674 6.1280 5.8178 5.5339 5.2732 5.0333 4.8122 18

19 17.2.260 is. 6785 i4.3238 13.1339 i2.0853 lU581 10.3356 9.6036 8.950l 8,3649 7:8393 7.3658 6.9380 6.55.04 6.198.2 5.8775 5.5S45 S.3162 5;0700 ..~:.~~3:~.:,L~j~J
20 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 7.4694 7.0248 6.6231 6.2593 5.9288 5.6278 5.3527 5.1009 4.8696 20

25 12.0232 19.5235 17;4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 ..~:~~7gJ 8.4217 .7.843i 7.3300 6.8729 '6AliM 6.0971 5.7662 ~A669 .5;j951
=~~.~!i:~iiiJ
30 25.8077 22.3965 19.6004 17.2920 15.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.6938 8.0552 7.4957 7.0027 6.5660 6.1772 5.8294 5.5168 5.2347 4.9789 30
... ,. '---"'-1 _. ,-~,~~. "'-.-.'"'J
3S 29.4086 24.9986 21.4872 18.6646 16.3742 14.4982 12.9477 11.1\546 10.56689.6tY::,2 .8.85.52 8.1755 7.5856 7.0700 MIS6 6.2i~~. _~:8:5~~... _ .5:~~~~ ,..c. 5.. 2512 ·.·:.j:'::~~:,,~;i~~;J
40 32.8'347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.9511 8.2438 7.6344 7.1050 6.6418 6.2335 5.8713 5.5482 5.2582 4.9966 . 40

45 36.0945 29.4902 24.5187 20.7200 17.7741 15.4.558 13.6055 12;)084 10.8812 g..8,~~f.1 9.0079 8.282, 7.6609 7.1232 6.6543 6.2421 5.8773 5.5523 5.2611
so 39.1961 31.4236 25.7298 21.4822 18.2559 15.7619 13.8007 12.2335 10.9617 9.9148' 9.0417 S.3045 7.6752 7.1327 6.6605 6.2463 5.8801 5.5541 5.2623 4.9995 50

740 Appendj~ I The time value of money Appendix I The time value of money 741
 'Formulae

t., = 1 r+!r -1
T

Ii- __l)~-Rl'
1=.;;....1_._ _

pv=
FV If.
'T-I
(1 + k)"
T
FVn =PV(l + k)" _ LRt
" R=_t=__
l!_
T
.PVA=C{i-(l: k)-} E(R) :!! Rf + II (E(R.)' - Ill) (~\

,--)
~A ~ C{(~+~n -1} V ~
=",,'
CF
t
"
. ~1(l+rt
PYA" = C{[l- (1 +k.t)-{,o-!)] +l}
" "

. WA.u = C{l(1 + k)1Hl.

k
-1] }
-1

WAll
,."
= C{[1-
•
(l -+
k
k)/I!]}
(1 +krb

C
PVP=-
k
~
o
PV = C[-=-__
r B r-g.
"1
l_X (1 +B)n]
1+ r '

R = p-p' +D"
I
pt-l X 100
jl-l y _ .»t
e -. "
II ~ -g
.(....j o.~.Ys
B(ll) = "\:' u.
p-l
l'JV
r~ = P.
_0_
BPS

I
,
 1.+ (F - NPZi )
k t4bt ::;:. ·Il
(F + i\Pi )
2
J(}= t (1+C~IRRt
1=1

D EA.4., = NPV
k :;-
Pt ill •NPp PlP.4k .n

D A.RR = average net profit

average investment (l

" "d:enfl:r payout ratio

DlVI .• DPS
= --
. BPS
. ~~~h ~te. = (1- payout 1'3(10) x rci01"D 011 tqui'1

DividelHiyield = (Uvidendspershal'e
'. pdeep.ershare

J n

D
. _ ...'' . . ~'"
~ (D.E£- Dy)2
k =_1_+0- . ' ... - SDY:::: _t=_1 _ _ __
( (I.at NP
- fI
o.
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.()
"

.'"t: .

II .. I '
'n~cc=~
. L k x W·x
x=i
CoSl or forgoing casb disrouni =~
,.
'.: 1'" .

" P.. = (NIt,' +S)

x N+l r; "'

.'
•

JAo. •