7 Most Powerful Time Value of Money Equations for Decision Making in Investment

1.  Future Worth/Value - Symbol ((F/P, i%, n) Converts to a future value -F- given a present single payment - P - today.
Where:
F = Future Value
P = Single payment Today
i = interest rate per period
n = Number of periods

2. Present Worth/Value - Symbol (P/F,i%,n) Converts a present value - P -  given a future payment - F.


Where:
P = Present Value
P = Single future payment
i = discount rate per period
n = Number of periods


3. Uniform Series Present Worth/Value - Symbol (P/A, i%, n)
Converts a uniform amount, annuity - A - per interest period to a present value - P
Top of FormBottom of FormWhere:
P = present value
A = amount per interest period
i = discount rate
n = discount periods

    4. Sinking Fund

Sinking Fund - Symbol (A/F, i%, n)

Converts to a uniform amount, annuity - A - per interest period a given specific future value - F
Where:
A = uniform amount per period
F = future value
i = interest rate
n = number of periods

5. Uniform Series Annuity - Symbol (F/A, i%, n)
Converts to a future value - F - given a uniform amount, annuity - A - per interest period
Where:
F = future value
A = uniform amount per period
i = interest rate
n = numbers of periods

6. Capital Recovery  - Symbol (A/P, i%, n)
Converts a present value - P - to a uniform amount, annuity - A - per interest period
Where:
P = present value
A = amount per interest period
i = interest rate
n = discount periods

7.      Net Present Value/Worth (NPV/NPW)

Total NPV
NPV for n year



Where:
Co – Initial Investment,
n – number of years,
C – Cash-flow of n year
7 Most Powerful Time Value of Money Equations for Decision Making in Investment 7 Most Powerful Time Value of Money Equations for Decision Making in Investment Reviewed by CEDRICK KAU on February 13, 2017 Rating: 5

Related Articles

2017. Powered by Blogger.