Period of cash flows Single Bed Bunk Bed Set Year O (500 000) (600 000) Year 1 250 000 250 000 Year 2 300 000 360 000
Final value = principal value x (1+I)^n
I= interest rate for n say 10% it would be 0.10
if n= 1 year then interest rate if
one year interest rate so if 5 years n= 5
if interest rate is monthly then divide year int rate by 12
and increase n by 12 so 5 years equals 60 terms of interest calculation.
cost of equity would be pv + pv * CPI
if CPi was 2.5% as an example
cost of equity for year one= PV + (PV * 2.5/100)
fv = pv*(1+2.5/100)^1
if cpi is different each year then
fv= pv1(1+2.5/100)^1 + pv1(1+cpi2/100)^1 + pv1(1+cpi3/100)^1
If CPI is same for each year then FV = PV (1+0.025)^number of years.
^ 2 is like squared
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