What is the meaning of "discounted value of expected net receipts?
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What is the meaning of "discounted value of expected net receipts?
discounted value of expected net receipts
The discounted value is essentially the present value of the future cash flows. It can be applied to different things.
As a simple example, let's say you sell something and are expecting payments of $3000 each at the end of the next four years. You have a series of payments, for four periods, at $3000 each. Let's also say there is an assumed interest on this of 5%.
You would figure out the present value of an annuity using those above numbers. That's the "discounted amount." The four $3000 payments will add up to $12,000 in total. But the present value of that is $10,640 (rounded). The difference between those two would be your assumed interest.
A "net receipt" is the difference between any receipts and any payouts. If you could receive $3000 a year, but also had to pay out $500 a year for something related to this, then the net would be $2500. So you'd do the present value of $2500.
There's lots of different applications of this, and different terms can be used.
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