posted 2½years ago by pin
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Net Present Value
Which of the following is the correct formula for calculating present value of a business or organization?
Note: R = Interest rate, n = time periods
a. Present Value = Future Value/(1+R)n
b. Present Value = Future Value/(1-R)n
c. Present Value = (1+R)n
d. Present Value = (1-R)n / Future Value
george (2¼years ago):
The answer is A: FV/(1+R)n. Present value will decrease when the rate is increasing, which mean that the higher the rate - the more money we would get if we invest our current value into some bank, instead of a project.
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