Single Cash Flow PV = FV (1+r)n Annuity : FV = PV(1+r) n (1+r)" − 1 (1+r)n−1 * FVA = PMT FVAD = PMT (1+r) r PVA = PMT r 1 1 1 (1+r)n PVAD = PMT (1+r)*(1+r) r r r(1+r)n PMT = PV (1+r)n-1 Perpetuities PVP = PMT r

Single Cash Flow PV = FV (1+r)n Annuity : FV = PV(1+r) n (1+r)" − 1 (1+r)n−1 * FVA = PMT FVAD = PMT (1+r) r PVA = PMT r 1 1 1 (1+r)n PVAD = PMT (1+r)*(1+r) r r r(1+r)n PMT = PV (1+r)n-1 Perpetuities PVP = PMT r

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.12: Uneven, Or Irregular, Cash Flows

Problem 1ST

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Question

Fiona plans to invest $500 later today. She wants to know to what amount her investment will grow in 20 years if she earns 12 percent interest compounded (a) annually, (b) quarterly, and (c) monthly. (LO 4-2 & 4-5)

Single Cash Flow
PV =
FV
(1+r)n
Annuity
:
FV = PV(1+r) n
(1+r)" − 1
(1+r)n−1 *
FVA = PMT
FVAD = PMT
(1+r)
r
PVA = PMT
r
1
1
1
(1+r)n
PVAD = PMT
(1+r)*(1+r)
r
r
r(1+r)n
PMT = PV
(1+r)n-1
Perpetuities
PVP =
PMT
r

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