NPV

AMITAG1990
Finance Junkie
Posts: 89
Joined: Sat Sep 22, 2012 12:35 pm

NPV

Postby AMITAG1990 » Sat Nov 03, 2012 7:45 pm

can you please tell me how to calculate NPV on financial calc.
e.g
if we get $100 per year with a addition of 2% each year for 10 year then how to get the ans on financial calc. Disc @ 10% per annum.

balajismz
Finance Junkie
Posts: 63
Joined: Mon Nov 05, 2012 9:13 am

Re: NPV

Postby balajismz » Mon Nov 05, 2012 9:17 am

if we get $100 per year with a addition of 2% each year for 10 year then how to get the ans on financial calc. Disc @ 10% per annum.

Try inputting these in calc
FV=100
I/Y=10
PMT=2
N=10
Calc PV

AMITAG1990
Finance Junkie
Posts: 89
Joined: Sat Sep 22, 2012 12:35 pm

Re: NPV

Postby AMITAG1990 » Mon Nov 05, 2012 4:31 pm

balaji this works only for bond, as here i am getting $100 every year with a addition of 2% every year, this won't provide the right answer. You need to use NPV function. i.e discounting every $100. And in bond it only once consider a $100. getting me ??

content.pristine
Finance Junkie
Posts: 356
Joined: Wed Apr 11, 2012 11:26 am

Re: NPV

Postby content.pristine » Mon Nov 05, 2012 8:48 pm

PV = 100/(1.1) + 100*(1.02)/(1.1)^2 + 100*(1.02)^2/(1.1)^3 + .... 100*(1.02)^9/(1.1)^10
This is the Sum of a Finite Geometric Progression

PV = a*(1-r^t)/(1-r)
Here,
a = 100/1.1 = 90.909...
r= 1.02/1.1 = 0.92727..
t=10

Hence PV = 662.5311

This is a good question. What is its source?
8-)

AMITAG1990
Finance Junkie
Posts: 89
Joined: Sat Sep 22, 2012 12:35 pm

Re: NPV

Postby AMITAG1990 » Tue Nov 06, 2012 1:15 pm

I just created it by my own.. I also know to solve it by this way but i just want to know to solve it by using NPV function of financial calculator, for better speed in exam.. so plz help me..


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