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 ...

The basic premise of finance is that money has time value -- a dollar in hand today is worth more than a dollar in the future. The study of finance seeks to make it possible to compare the value of a ...

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. Marguerita is a Certified Financial Planner (CFP), Chartered Retirement Planning Counselor ...

Investopedia contributors come from a range of backgrounds, and over 25 years there have been thousands of expert writers and editors who have contributed. Amy is an ACA and the CEO and founder of ...

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 ...

Discounting a future cash flow expresses future returns in today's dollars. This allows a fair comparison between initial business expenses and your expected or realized returns. As an example, you ...

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 ...

Calculate the present value of each year's cash flow by dividing by (1 + discount rate)^number of years. Sum all present values to find the total value of projected cash flows, which in this example ...