# ch5.pdf - 1 Present Value the value today of a future cash...

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1. Present Value the value today of a future cash flows will grow over a given period of time when compounded at a given interest rate 2. Future Value the amount to which a cash flow or series of cash flows will grow over a given period of time when compounded at a given interest rate 3. Compounding the arithmetic process of determining the final value of cash flow or series of cash flows when compounded interest is applied. 4. PV Present Value, or beginning amount 5. FVn Future value, or ending amount, of your account after N periods. Whereas PV is the value now, or the present value, FVn is the value N periods into the future, after the interest earned has been added to the account. 6. CFt Cash flow, can be positive or negative. the cash flow for a particular period is often given as a subscript, CFt, where t is the period. thus, FCo = PV = the cash flow at time 0, where CF3 is the cash flow at the end of period 3 7.
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