To briefly summarize Fuller's main point: the net present value
criterion demonstrates that there is a "switching" from one type of investment project to another as interest rates change.
If a bond is purchased at face value on an issue or interest rate date, its present value
is its face value.
of Crest Engineering Services, using a 10% discount rate, to have proved reserves of 19,820 net barrels of oil with a net present value
of US$180,000, possible reserves of 45,160 net barrels of oil with a net present value
of US$707,000 for total reserves of 64,990 barrels of oil with a net present value
However, if you viewed money as having a time value of 18 percent, the present value
of that $1.
concepts are also very important in financial planning.
That figure assumes a modest price of oil at $50 per barrel and gas at $9 per million BTU; if oil prices were to average $100 per barrel and gas $15, the present value
of GCC energy reserves would be $ 37.
These present value
and future value concepts can also be used as the building blocks for other time value of money calculations.
If the stock price meets this criterion and early exercise has not occurred in prior periods, the probability (G7) of this exhibit 1 node is multiplied by the option's intrinsic value (K13) and discounted by the risk-free interest rate (B15) to determine the path's present value
W takes exception to the Tax Court's calculation of LP's net present value
, based on a 25-year useful life for the EMS.
The court held, inter alia, that the present value
of $2,095,000 for Padilla's future medical expenses must stand undisturbed.
Second, the present value
of the death benefit decreases as the insured's lifetime lengthens.
The three dimensions to an economic analysis using present value
are assessing the magnitudes of the relevant cost or benefit flows, determining the period over which these flows will occur, and selecting the appropriate discount rate.