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Gold/Mining/Energy : Winspear Resources -- Ignore unavailable to you. Want to Upgrade?

To: ddl who wrote (26184)	7/12/2000 6:21:58 PM
From: .Trev	Read Replies (1) \| Respond to of 26850

Yes it's pretty close to what you describe. Another name for the discount rate is "The Opportunity Cost" In other words the rate of return that you could resonably expect to get from an other investment made at the same time, i.e. NOW. That's why people don't normally consider present worth to extend very far into the future because the discounting effect is cumulative each year. The rates change of course from time to time but basically they relate to the world market for money in fair sized gobs. The guys that control the flow are concerned with:- 1) How much do you need? 2) How long do you need it? i.e. when will you repay it? 3) What's the track record of the borrower AND his consultants 4) What Risks are involved in the project itself 5) What other choices of investment are available for comparison purposes. Hope that helps a bit Cheers

To: ddl who wrote (26184)	7/12/2000 8:20:51 PM
From: maintenance	Respond to of 26850

NPV represents the value above fair. An NPV of zero represents a fair price. Example. You pay $100 for a bond that will give you 10% interest plus return your principle at the end of one year. So the cash flows are Nominal Discounted Pay for bond now -100 -100 Receive int+ prin +110 +100 at end of year ------ NPV 0 An informed person should be indiferent to such a transaction since there is no added value to buying the bond. It is fair.