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-   -   What is the meaning of "discounted value of expected net receipts? (https://www.askmehelpdesk.com/showthread.php?t=148324)

  • Nov 4, 2007, 02:19 AM
    lee1103
    What is the meaning of "discounted value of expected net receipts?
    What is the meaning of "discounted value of expected net receipts?
  • Apr 29, 2009, 08:20 PM
    brainworm

    discounted value of expected net receipts
  • Apr 30, 2009, 12:25 AM
    morgaine300

    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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