The discount factor of a company is the rate of return that a capital expenditure project must meet to be accepted. It is used to calculate the net present value of future cash flows from a project ...

Net present value and the profitability index are helpful tools that allow investors and companies make decisions about where to allocate their money for the best return. Net present value tells us ...

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Image source: Flickr user Ken Funakoshi. A perpetual annuity, also called a perpetuity, promises to pay a certain amount of money to its owner forever. A classic example would be that of a perpetual ...

A discounted cash flow, or DCF, analysis measures the value of a business or project, such as a new factory for your small business. This value equals the sum of all of the project's future annual ...

The Gordon model allows for the fact that the market might put a price on a stock that's different from what you might estimate using the equation above. A higher stock price than predicted implies a ...

Calculating the interest rate using the present value formula can at first seem impossible. However, with a little math and some common sense, anyone can quickly calculate an investment's interest ...

Vol. 94, No. 2, Papers and Proceedings of the One Hundred Sixteenth Annual Meeting of the American Economic Association San Diego, CA, January 3-5, 2004 (May, 2004), pp. 119-125 (7 pages) The American ...

Here's how to calculate the present value of a perpetual annuity that promises to pay flat or growing annual payments with helpful examples. A perpetual annuity, also called a perpetuity, promises to ...