Please, I need a little help accountants.

[VerbalIntercourse]

Ahh...true Nas.

Wolf and Pride: Put simply -If you are solving this manually - You have to calculate each payment separately and then sum them at the end.

Year 1 + Year 2 + Year 3. In Year 3: You have to calculate the $10M and $100M lump sum payments.

The formula for the standard method assumes =one payment of $130M in Year 3. Make sense?

If you are using Excel functions, use the formula I provided in my initial post.

We made a peace treaty though - so I am willing to let this issue rest.

holy Shyt what the fukk is going on here?

Manually it's just this!

( 10m [(1 - (1 / (1 + .10)^3)) / .10 ]) + [100m/ (1+.10)^3]= ANSWER TO THE DAMN problem.
(10m [(1- (1/ (1.331))/.10 ] + 100m/1.331

(10m (.24868/.10) + 75.131M

10M (2.4868)+ 75.13m
24.868m +75.13m= 99.998M The answer is 100 million.




How hard do you have to make this out to be?

Using the finance App in my 10 year old Ti-83, I got an Exact calculation of 100 million.

 

[Cory MBA]

holy Shyt what the fukk is going on here?

Manually it's just this!

( 10m [(1 - (1 / (1 + .10)^3)) / .10 ]) + [100m/ (1+.10)^3]= ANSWER TO THE DAMN problem.
(10m [(1- (1/ (1.331))/.10 ] + 100m/1.331

(10m (.24868/.10) + 75.131M

10M (2.4868)+ 75.13m
24.868m +75.13m= 99.998M The answer is 100 million.




How hard do you have to make this out to be?

Using the finance App in my 10 year old Ti-83, I got an Exact calculation of 100 million.

LOL...I tried the simple approach in my first response.

I just use Excel, Doggie.

I haven't touched a formula or a calculator any time in recent memory.

 

[Mountain]

10m/1.1+10m/1.1^2+110m/1.1^3

that's what i'm going with.

Again only because I see the issue with the 130m FV the way the question is written and this is for school so i'm going with the academic answer.

Nah slim, they're right.

The whole point of discounting is to discount cash flows individually if provided with more than one cash flow over different periods of time for an investment, or contractual agreement. So provided there are multiple cash flow revenues specified, as with Doobies scenario, the cumalative PV equation has to be used.

Now what we did, by using the core PV formula, was discount for a single cash flow.

If the question read like this:

Eddy Money signed a three-year contract to host the Tonight Show. Although he will receive 130 million dollars after three years, the terms of the contract are that he is to receive 10 million plus an additional 100 million at the end of the third year. Assuming an annual interest rate of 10 percent, what is the actual value of Money's contract in today's dollars?

Well?

then we would be correct, as there would only be one corresponding time increment and cash flow variable.

Never even knew what a cumulative PV was until earlier today, now I understand that sht, higher learning for real

Spoiler

Dobbie you still need to slap the sht out your teacher though

 

[CrimsonTider]

its a cost accounting capital budget problem .

This isn't cost accounting. It's finance.

This is a very simple cap. Bgt. problem.

How this grew to 3 pages of bullshyt is amazing.

there are two lines here.

pv of and anuity (end of period, 3 years, 10%,10m)=Y
PV (3 years, 100m, 10%)=F

F + Y= PV of contract pay out.

The end.

I explained how to do it on the 1st page

 

[VerbalIntercourse]

This isn't cost accounting. It's finance.


I explained how to do it on the 1st page

i've never taken finance, but I have taken cost.

 

[Brown_Pride]

Nah slim, they're right.

The whole point of discounting is to discount cash flows individually if provided with more than one cash flow over different periods of time for an investment, or contractual agreement. So provided there are multiple cash flow revenues specified, as with Doobies scenario, the cumalative PV equation has to be used.

Now what we did, by using the core PV formula, was discount for a single cash flow.

If the question read like this:



then we would be correct, as there would only be one corresponding time increment and cash flow variable.

Never even knew what a cumulative PV was until earlier today, now I understand that sht, higher learning for real

Spoiler

Dobbie you still need to slap the sht out your teacher though

Right which is why
10m/1.1 = 9,090,909.09
10m/1.1^2 = 8,264,462.81
110m/1.1^3 = 82,644,628.10
= 100m

so i'm in agreement too

 

[Brown_Pride]

LOL...I tried the simple approach in my first response.

I just use Excel, Doggie.

I haven't touched a formula or a calculator any time in recent memory.

good looking out in excel too btw, didn't know how to do that in excel for a variable payment by using the formula.