present value tables

present value tables

tables which are used in INVESTMENT APPRAISAL undertaken by means of DISCOUNTED CASH FLOW. The tables show how much we need to invest now, at a certain rate of interest and for a particular period of time, to produce £1. For example, the tables show that if we want to produce £1 in 5 years' time at 10%, we will need to invest £0.621 now. Alternatively, the tables show that £1 receivable in 5 years' time, taking into account a rate of interest 10%, will be worth only 62p (that is, £0.621).
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* The classic present value tables using axes of time and interest rates.
The casebook includes present value tables (useful in determining a worker's lost income or the present value of the income produced by a capital asset), and tables of cases, statutes/rules/treaties/etc., and secondary authorities.
The question states that the company's post-tax cost of capital is 8 per cent, so you can look up the present value tables and obtain the discount factors for years one to four at a discount rate of 8 per cent (see line 11 of table 3).
The first sets of "present value tables" were calculated by hand.
Present value tables are also available for calculations.
In Capital Budgeting, however, Dean recommended using DCF analysis only when cash flows are uneven and the required earnings rate is high; otherwise, Dean felt that the average rate of return method was satisfactory for evaluating most capital projects, so he did not even include present value tables in his book.
The diffusion of discounted cash flow concepts by business school academics in the 1950s was aided by the publication of extensive present value tables calculated by electronic computers.
(60)Charles Christenson, "Construction of Present Value Tables for Use in Evaluating Capital Investment Opportunities," Accounting Review 30 (Oct.
Written as a guide for practicing engineers, the book devoted only four pages, including a present value table, to the discussion of capital expenditure analysis.
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