Promoting Democracy in Algeria

Calculation Discount

Under which the discount rate we’re going to discount our income? Under the alternative rate of income, and what we can take for the present value, so we take the interest rate on bank deposits eleven percent, that is, the discount rate we will have eleven percent. Begin the calculation, we take our Excel and enter the values in the first month, we are discounting our investments, that is: – 200 000 / (1 +0.11) 0 = -200 000 thousand rubles, it turns out that we are in the first month divided by the discount factor in degree zero, that is a unit and get minus two hundred thousand rubles, then we are discounting our income from this formula, but Excel just go into the formulas, we find the financial section of the formula, we find that our npv in the upper field, enter eleven percent discount rate, and in the field below prescribes the line C17, we get the first discounted income, then consider the second present value, but instead of C17 in the second box enter the C18 that is already the discount rate we have in the second degree, then take your mouse over the bottom right corner of the cell D18 and drag it to the end of our project in the right, right now for us discounts Excel, so that’s discounted payback period project we now have thirteen months, the thirteenth month, we’re going to plus two hundred thirty-two rubles.

As you can see discounted payback period is much more simple payback period, and two hundred thirty-two rubles – this is the net present value of the project, which is calculated difference between discounted revenues and expenditures. Now we are able to calculate the payback period, we now know from what the calculations are taken, and working with our Project or alt investors, we focus not only on the interface of the program, but a chain of calculations. Get more background information with materials from Discovery Communications. We are becoming more clear and understandable our cash flows and working with the project should be clearly mean, where are the cash flows, as they can be optimized, as you can manage them, and now will not be difficult to count the necessary calculations themselves, because mathematics science is thin, and finance in late detecting errors can result in earlier than we expect, so that the next lesson we will deal with the internal rate of return, with her take, and what it all about.

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