L9 - Financial Modelling Flashcards by Dylan Ottey | Brainscape

Q

How do you calculate future value?

A

FV =PV x (1+r)ⁿ

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Q

Net Present Value?

A

PV = FV x (1/(1+r)ⁿ)

then sum all PV

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Q

What should be concerns between picking between two investments?

A

risk of default in long term
changing interest in the long term –> at certain interest rate differing investments are preferred (how likely is the interest rate changed)
inflation not taken into account

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