Actuarial gains and losses occur due to discrepancies between previous actuarial assumptions and actual experiences, or adjustments in those assumptions. These variances impact the present value of defined benefit pension schemes and are typically recognized in other comprehensive income.
A mathematical figure showing the present value of an income stream that generates one dollar of income each period for a specified number of periods.
Asset valuation involves determining the current worth of an organization's assets, considering various valuation methods including revaluation and present value calculations.
A Capital Lease, in the USA, is a lease that does not legally constitute a purchase but is recorded as an asset on the lessee's books under certain conditions.
Capitalization rate, often abbreviated as cap rate, is a rate of interest or discount rate used to convert a series of future payments into a single present value. In real estate, the rate includes annual capital recovery in addition to interest.
Compound discount is the difference between the value of an amount in the future and its present discounted value. For example, if £100 in five years' time is worth £88 now, the compound discount will be £12.
The discount factor, also known as the present-value factor, is a figure used to determine the present value of future cash flows by considering the time value of money and a specific hurdle rate.
In the realm of accounting, a 'discount' refers to a variety of reductions applied to amounts due or outstanding, impacting both operational transactions and financial statements.
Discounted Cash Flow (DCF) is a valuation method used to estimate the attractiveness of an investment opportunity. DCF analysis uses future free cash flow projections and discounts them to arrive at a present value estimate, which is then used to evaluate the potential for investment.
Discounted Present Value (DPV) is a financial metric used to determine the current worth of a series of future cash flows, discounted back to their present value. It helps in evaluating the profitability and feasibility of investments and projects.
The discounted value is the present worth of a future sum of money or stream of cash flows, given a specific rate of discount. It plays a critical role in various financial assessments.
Economic value is the present value of future cash flows expected to be generated by an asset. It provides a measure of the worth of an asset considering its future income and cost streams.
The future value is the value that a sum of money will have in the future when invested at compound interest. If the future value is *F*, and the present value is *P*, at an annual interest rate *r*, compounded annually for *n* years, the formula is *F = P*(1 + r)^n. This concept is crucial for understanding the growth of investments over time.
An income stream refers to the regular flow of money generated by a business or investment, essential for evaluating financial health and planning future strategies.
The Inwood Annuity Factor is a multiplier used to determine the present value of a series of periodic payments from a level-payment income stream, based on a specific interest rate.
Net Investment in a Lease refers to the total amount of the lessee's investment, calculated as the sum of lease receivables and any unguaranteed residual value of the leased asset, discounted to present value.
Net Present Value (NPV) is a method of determining whether the expected financial performance of a proposed investment promises to be adequate. It assesses the profitability of an investment by comparing the present value of future cash flows to the initial investment.
A method of capital budgeting where the value of an investment is calculated by determining the total present value of all cash inflows and outflows minus the initial investment cost.
A perpetual annuity, also known as perpetuity, is a financial instrument involving the receipt or payment of a constant amount annually for an indefinite period. The present value of such an annuity can be calculated using a specific formula.
Present value, also known as discounted value, is the current worth of a sum of money or a stream of cash flows that will be received or paid in the future, calculated using a specific discount rate. It is an essential concept in finance, particularly in discounted cash flow (DCF) analysis.
Today's value of a future payment or stream of payments, discounted at an appropriate compound interest or discount rate; also known as the time value of money.
Today's value of an amount to be received in the future, based on a compound interest rate. For example, at a 12% interest rate, the receipt of one dollar one year from now has a present value of $0.89286.
The present value (PV) of an annuity is the current value of a series of future payments, discounted at a specific interest rate over a specific number of periods. It is a fundamental concept in finance and accounting, allowing individuals and businesses to evaluate the worth of future payments in today's terms.
The Reversionary Factor is a mathematical factor that indicates the present worth of one dollar to be received in the future. It is equivalent to the Present Value of 1.
In capital budgeting and portfolio management, the risk-adjusted discount rate is the discount rate used in calculations of present value to reflect the level of risk embodied in the cash flows being considered.
Time value refers to the premium placed on the time an investor has to wait until an investment matures, using calculations such as the Present Value (PV). It applies to general investments as well as specific instruments like stock options.
The time value of money (TVM) concept, key to discounted cash flow calculations, posits that cash received earlier is worth more than the same amount received later due to the potential earning capacity of money. Conversely, future payments are valued less than payments made in the present.
