F7 Cost of Investment

[jacq]

Hi all

I'm looking for some help with the discount fraction for deferred consideration. I know that the interest rate is 10% and the payment is deferred for 3 yrs - how do I calculate the fair value? Thanks

[Suze]

multiply the consideration by 1/1.1 to the 3rd power to bring it to the present value

[mode21]

you have to use 1 / (1+10)3 that should be the power 3, that should give you .751, just multiple this answer by the consideration and you will get the present value of the consideration