XL file containing complete explainations ... double click on boxes shows complete calculations - 26987

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galiseenu

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  • Posted on: Wed 02 Oct, 2013
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This examples talks about University benefactor, who is willing to donate for student scholarship. It thinks of two alternatives. First, to pay $ 10 millions today, and secondly, to pay $  5.5 millions for a period of 2 year. It should go for that alternative which leads to less cash outflow. And, in order to decide this, we will calculate the present value of second alternative.
               
First alternative :           10.00 Millions        
               
Calculation of present value of second alternative:-      
Year CF Factors @ 6% PV of CF        
1 5.5             0.94                5.19    
Attachments
answers.xlsx
answers.xlsx