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McCauley Duration

RRichard7y ago
Dear Sir What is the point if the cost of the investment is not taken into account, what are you paying back????
John MoffatJohn MoffatTutor7y ago#1
It is taken in to account - the market value is the PV of the future cash flows, as always.
RRichard7y ago#2
Of course, but my point is that those future cash flows could be less than the cost of the investment. At least with NPV you deduct the investment, with McCauley you ignore the negative costs
John MoffatJohn MoffatTutor7y ago#3
But the PV of the future cash flows must equal the cost. The market value is always the PV of the future cash flows.
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