Apply Time Value Concepts
Series 65 · Flashcards
SERIES 65 · FLASHCARDS
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QUESTION
Compute
N
P
V
NPV
N
P
V
at
r
=
10
%
r=10\%
r
=
10%
for
C
F
0
=
−
1000
CF_0=-1000
C
F
0
=
−
1000
and
C
F
1
=
1100
CF_1=1100
C
F
1
=
1100
.
QUESTION
State the formula for NPV given cash flows
C
F
t
CF_t
C
F
t
discounted at rate
r
r
r
.
QUESTION
Compute
P
V
PV
P
V
of a perpetuity paying
P
M
T
=
100
PMT=100
P
M
T
=
100
per year at
r
=
10
%
r=10\%
r
=
10%
.
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ANSWER
1000
1000
1000
. Divides the constant annual payment by the discount rate to value the infinite payment stream.
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