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What tax condition must hold in order for a financial lease transaction to generate positive net-present-value tax benefits for both the lessor and lessee?
"Leasing is only beneficial when the present value of the benefits of leasing exceeds the present value of the costs of leasing." - Corporate Financial Management, Third Edition, by Douglas R.Emery, John D.Finnerty, and John D.Stowe
Explain wealth maximization and value maximization objectives of financial management?
Wealth maximization of financial management focuses on increasing fixed and current assets while value maximization focuses to strengthen intangible assets.
What approach do financial managers prefer future or present value?
Financial managers tend to prefer using the present value technique, because it's much easier to make decisions at time zero with present values than future values.
What is the difference between the coupon rate and discount rate in financial investments?
The coupon rate is the fixed interest rate paid on a bond, while the discount rate is the rate used to calculate the present value of future cash flows in an investment.
Why the calculation of present value is important in decision making?
When calculating any return on investment or the amount to be spent on a project, you have to do the calculation using the present value of any spending or income to be received, in order to calculate it without the effect of interest or any other event that might effect the inflow or outflow. Only by using the present value of the amounts do you have common ground to compare the options or to calculate the true value of the income.
How do you calculate PVIFA using financial calculator?
How to calculate PVIFA, or Present Value Interest Factor of an Annuity, depends on your particular financial calculator. In general, you input the information you have using the Present Value function and the calculator will use factor tables to generate an answer.
Basic Financial Calculator?
Basic Financial Calculator This basic financial calculator works just like a pocket financial calculator. In addition to the normal calculator arithmetic it can also calculate present value, future value, payments or number of periods.
What tax condition must hold in order for a financial lease transaction to generate positive net-present-value tax benefits for both the lessor and lessee?
"Leasing is only beneficial when the present value of the benefits of leasing exceeds the present value of the costs of leasing." - Corporate Financial Management, Third Edition, by Douglas R.Emery, John D.Finnerty, and John D.Stowe
What does the NPV function do in Excel?
You use the NPV function. Start by specifying the rate and follow it with a list of future values that you want to help determine your result. So you could have something like this:=NPV(5%,10,20)
If you want to find the present value of an investment you should choose the financial function?
You can use the PV function or the NPV function. Present Value is the result of discounting future amounts to the present. Net Present Value is the present value of the cash inflows minus the present value of the cash outflows.
Explain wealth maximization and value maximization objectives of financial management?
Wealth maximization of financial management focuses on increasing fixed and current assets while value maximization focuses to strengthen intangible assets.
What is a present value calculator?
A present value calculator is a calculator that is used to figure out the future value of something based on constant payments and interest rates. It helps to calculate the present value as well.
What are the basic objectives of financial management?
The objective of financial management is wealth maximization rather than profit maximization. Wealth maximization means the total value of the firm.
What approach do financial managers prefer future or present value?
Financial managers tend to prefer using the present value technique, because it's much easier to make decisions at time zero with present values than future values.
What is the PDV formula used for in financial analysis and how can it be applied to evaluate the present value of future cash flows?
The PDV formula, also known as Present Discounted Value formula, is used in financial analysis to calculate the current value of future cash flows. It takes into account the time value of money by discounting future cash flows back to their present value. By applying the PDV formula, analysts can evaluate the profitability and risk associated with an investment or project by determining its net present value. This helps in making informed decisions about whether to proceed with the investment based on its potential returns compared to the initial cost.
Would you pursue the investment if the net present value is negative?
No. Unless the non-financial value was more than enough to offset the expected financial loss.
How do you calculate rate of return?
by using the Net present value calculations.
