Download presentation
Presentation is loading. Please wait.
1
Calculation of Present Value
Farrokh Alemi, Ph.D.
2
Present Value
3
“Show Me the Cash” Years before receiving the cash
Interest rate or opportunity cost of investment
4
Example of Present Value
Interest rate Years till return If we assume a 6% interest rate, receiving $1,000 in 5 Years is worth $747 today.
5
Present Value of IT Costs
Year 1 Year 2 Year 3 Year 4 Year 5 Cost in 000 $88,167 $70,999 $47,335 $35,501 $28,399 Present value? $83,176 $63,188 $39,743 $28,120 $21,221 Assume 6% Interest Rate or 0.06
6
Present Value of IT Costs
Year 1 Year 2 Year 3 Year 4 Year 5 Cost in 000 $88,167 $70,999 $47,335 $35,501 $28,399 Present value? $83,176 $63,188 $39,743 $28,120 $21,221 Shows returns in each year
7
Present Value of IT Costs
Year 1 Year 2 Year 3 Year 4 Year 5 Cost in 000 $88,167 $70,999 $47,335 $35,501 $28,399 Present value $83,176 $63,188 $39,743 $28,120 $21,221
8
Present Value of IT Costs
Year 1 Year 2 Year 3 Year 4 Year 5 Cost in 000 $88,167 $70,999 $47,335 $35,501 $28,399 Present value $83,176 $63,188 $39,743 $28,120 $21,221
9
Present Value of IT Costs
Year 1 Year 2 Year 3 Year 4 Year 5 Cost in 000 $88,167 $70,999 $47,335 $35,501 $28,399 Present value $83,176 $63,188 $39,743 $28,120 $21,221
10
Present Value of IT Costs
Year 1 Year 2 Year 3 Year 4 Year 5 Cost in 000 $88,167 $70,999 $47,335 $35,501 $28,399 Present value $83,176 $63,188 $39,743 $28,120 $21,221
11
Present Value of IT Costs
Year 1 Year 2 Year 3 Year 4 Year 5 Cost in 000 $88,167 $70,999 $47,335 $35,501 $28,399 Present value $83,176 $63,188 $39,743 $28,120 $21,221
12
Present Value of IT Costs
Year 1 Year 2 Year 3 Year 4 Year 5 Cost in 000 $88,167 $70,999 $47,335 $35,501 $28,399 Present value $83,176 $63,188 $39,743 $28,120 $21,221
13
Present Value of IT Costs
Year 1 Year 2 Year 3 Year 4 Year 5 Cost in 000 $88,167 $70,999 $47,335 $35,501 $28,399 Present value $83,176 $63,188 $39,743 $28,120 $21,221
14
Present Value of IT Costs
Year 1 Year 2 Year 3 Year 4 Year 5 Cost in 000 $88,167 $70,999 $47,335 $35,501 $28,399 Present value $83,176 $63,188 $39,743 $28,120 $21,221 Present Value of 5-year Cost of Investment $235,450,000
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.