Future value

The Endwertmethode is a method of classical dynamic investment calculation. In this case, the one alternative course of action is preferred that the highest (asset ) brings the final value. The future value of an investment is the sum of the future values ​​of surpluses of investment. To determine the cash flows are compounded to the end of its useful life.

Distinction can be drawn between a total calculus, in which the final values ​​of the investment and its opportunity are determined and compared, and a differential calculus, in which the additional final value of the investment is determined.

Example

First, the final values ​​for the company with the investment ( EWM) and without the investment (ESA ) shall be calculated. For EWM applies:

For the final value of opportunity applies:

Here are

  • N - n useful life of the investment property in years
  • I - discount rate and
  • FK0 - borrowing at the beginning of the investment ( t = 0)
  • EK0 - Inserted equity at the start of the investment ( t = 0)

Excess payment (possibly negative) in period t

Here are

  • A_0 - rate to Begin the Year
  • A_t - rate at the end of the year

Endwertfaktor (EWF )

Also called Rentenendwertfaktor (REF)

An investment is to be judged positive if it has a higher final value than the final value of their opportunity, such as the system of own resources in the capital market or their use for another project. The yield of opportunity is determined by the discount rate i, so that an investment after the total calculus of Endwertmethode is advantageous if.

Difference viewing

The additional final value ΔEW (Delta EW) of an investment is calculated as the difference between the future value of the investment and the final value without the investment:

Here are

  • EK0 - equity at the start of the investment ( t = 0)
  • FK0 - borrowing at the beginning of the investment ( t = 0)

Initial outlay a0

Therefore, can be a formula for ΔEW by inserting it into the equation and forming directly specify:

An investment is advantageous according to the differential calculus of Endwertmethode if the additional final value is ΔEW positive.

The additional terminal value can also be determined by the net present value (additional initial value) to aufzinst the investment by multiplying it by the end of the investment.

Terminal value (finance) Financial capital#Borrowed capital Equity (finance)
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