Assume that time is measured in years and that interest rates are constant. A cashflow of amount £1000 is paid each year, with the first payment made at time 1 and the last payment made at time 20. Using a constant effective interest rate of 3% per annum, calculate the present value at time 0 of the cashflows.
Assume that time is measured in years and that interest rates are constant. A cashflow of amount £1000 is paid each year, with the first payment made at time 1 and the last payment made at time 20.
Using a constant effective interest rate of 3% per annum, calculate the
Present value refers to the current value of a future cash flow or series of cash flows, discounted by an appropriate interest rate to account for the time value of money. In other words, present value is the amount of money that would need to be invested today, at a given interest rate, to equal the value of a future cash flow or series of cash flows. If there are multiple cash flows, each cash flow should be discounted to its present value and then added together to get the total present value.
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