Investment portfoli1 1

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Running Head: INVESTMENT PORTFOLIO 1

Investment Portfolio.

Student`s Name:

Professor`s Name:

Date

INVESTMENT PORTFOLIO 2

Net Present Value

Net present value is the contrast between the existing value of cash surge and the

existing value of cash deluge. This means that, net present value is used to undertake the

future cash surge and the deluge linked with an investment by marking down future cash

surge to the current day and sum them all together. The resulting digit after summing the

positive and negative cash surge all together is the endowment net present value, after

calculating for the value of cash, one will have made profit in the investment if the procedure

is followed. Net present value is used to sum up capital budgeting in order to find out the

projects that are more likely to bring more interest. For example, if an organization gives cash

surge of 100,000 and the investors pays 100,000, the investor`s net present value is

equivalent to 0.

Internal Rate of Return

Internal rate of return is defined a metric used in economic analysis to determine the

remuneration of prospective investments. Internal rate of return is used to asses’ investments

and there worth, if profit was made or any loses where encountered during a project. It makes

it easy to compare one investment to another. Infernal rate of return is summed up by taking

the variance between the present value and the original starting value, discounted with the

original value and aggregated by 100. For example, invest 3000 now, receive 2 yearly

payments of 100 each and in the third year you paid an additional 3000. The present value is

3000, fast year is 100 / 1.10= 90.91, the second year is 100/1.10/1.10=82.64+3000=3,008.26,

adding all this up you get= 3000+90.91+3,008.26= 6099.17 while working with 10% interest.

Advantages and Disadvantages

Net present value does not assume reinvestment since this would be difficult and does

not also get affected by conventional cash surge pattern. Net present value considers each

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Running Head: INVESTMENT PORTFOLIO Investment Portfolio. Student`s Name: Professor`s Name: Date 1 INVESTMENT PORTFOLIO 2 Net Present Value Net present value is the contrast between the existing value of cash surge and the existing value of cash deluge. This means that, net present value is used to undertake the future cash surge and the deluge linked with an investment by marking down future cash surge to the current day and sum them all together. The resulting digit after summing the positive and negative cash surge all together is the endowment net present value, after calculating for the value of cash, one will have made profit in the investment if the procedure is followed. Net present value is used to sum up capital budgeting in order to find out the projects that are more likely to bring more interest. For example, if an organization gives cash surge of 100,000 and the invest ...
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