Calculate the Present Value for Multiple Cash Flows (Intermediate Accounting I #3)

What happens when we have multiple periods of different sized cash flows? We discount the cash flows individually using the equation we just learned. Illustrations included to clearly explain the concept like always!
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[@jonatonjuman3977]

You taught me what took my professor 3 days to explain. Definitely recommending these videos to my classmates. Thank you.

[@politepupper111]

Very helpful, i am a MBA student who is struggling a little with not coming from a business undergrad.

[@typicalgamer5560]

what did you major in?

[@sivakumaranbazhagan1672]

I thought I was never gonna figure this thing out. But thanks to you man!

[@ihiharris6272]

thank you!!! I havent done algebra in years haha but I remember a few things which helped lol - this is really helpful! thank you.

[@morgantaylor9956]

I hope anyone that is in intermediate accounting already knows how to manipulate an equation or else they will probably struggle tremendously. Thank you for being very thorough in your videos though. I am about to take my cumulative final in intermediate accounting I and your videos have really helped me through this class.

[@ADTrell1]

It's just simple algebra...no different from a(b+c)=d
If you want to solve for a just divide to get a by itself a=d/b+c

[@Botbotbot]

Wow I’ve been banging my head on this for years now thank you

[@kiki0244]

This video may be really old, but it saved me tonight. Thanks!

[@shilpashahigurung5819]

Thanks, you made it really simple to understand - got a test today!

[@NitroNath]

What happens if one year is a 0 dollar input so say instead of 400 in the second year it's 0 will that mean that the present value of that second year is 0 too

[@swevarodrigo2471]

Thankyou so much! This helped me alot!!

[@tehreem5906]

Thanks alot 🌸

[@mohammadomaidfazly9599]

Thanks a lot sir and I really appreciate the way of your explaining.

[@Toby0147m]

hi how to calculatelate :What is the present value of an annuity that pays five annual cash flows of $5,000 each, beginning in 5 years? Assume that the appropriate discount rate is 9%. ???

[@IVideo8]

What if it's on monthly basis, not yearly basis ? Say Year 1, monthly $ 100; Year 2, monthly $ 400; and Year 3, monthly $ 300, can we use the same formula but just divide the rate by 12 , then what about the t ?

[@estheressien]

Learnt alot. Well understood

[@ds7313]

I was hoping you would be using Financial Calculator to calculate

[@brookeschmidt8482]

Why did you make the rate 10%? Was that just an arbitrary number?

[@crunchybeatsia2112]

Is there any difference for due and regular cash flows

[@brianbirnbaum9760]

Wouldn’t the 649 be equal to the cash flows? Why is it work more?

[@brianbirnbaum9760]

This would be a great video if it said how you got the rate. Where did you pull 10% from?

[@NotepirateDave]

It's an arbitrary number that represents the cost of capital. The % fluctuates based on project.

[@NotepirateDave]

​@Brian Birnbaum It goes beyond the scope of the lesson.
In a basic example like this we would discount the cash flow using a risk-free rate how much you might get from a GIC or treasury bill (right now a 2 year treasury is 1.948%). We use this rate because you can either take the cash now and invest it at that risk-free rate or receive it later (in which you must take into account the opportunity cost of not receiving it today and not getting that interest you could have).
As you move on in corporate finance you will notice that the discount rate changes depending on the circumstance but I don't want to go outside the scope of the lesson.

[@bethanyelaine9949]

Why aren't the 1+r to the -1, -2, -3?

[@christoslefkimiotis9889]

What happens if you have multiple cash flows with a year? i.e. every quarter you receive $100 for 3 years and the annual rate is 10% for example? What rate will you use for the discounting? Thx.

[@tommyrgrs]

0.025

[@gauravavhale4836]

Can anyone tell why he took .89 instead of .88

[@mohammadalam3021]

Thanks

[@dukasipfinevondo6806]

Can you please help with
R900 paid at beginning of each six month for the period of seven years at interest rate of 8% compounded semiannually

[@jahidhasan8578]

so is $646.89 NOW worth the same as a total FUTURE payment of $800?

[@scottforgot8830]

According to this it depends on the rate of return if there's interest or how far into the future the payment is.

[@brianbirnbaum9760]

Depends on what years you receive the money not just the total sum.

[@priskaanis6283]

Thankyouuu

[@igorm8706]

where did 646.89 come from?

[@marmarsa]

the sum of all three cash flows. 90+330+225 from all of the cash flow values from year 1,2,3

[@ronaldc1582]

no one ever talks about TV in these scenarios. :(

[@Driving4bangers]

this sucks

[@Driving4bangers]

nvm i started to like it