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Time Value Formulas

# Time Value Formulas - -= T r g g r PV 1 1 1 1 \$ Annuity Due...

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Time Value Formulas Single Sum Cash Flow Future Value (FV) of \$1 received at “t=0” after “T” periods: ( 29 T r T FV + = 1 1 \$ Present Value (PV) of \$1 received “T” periods hence: ( 29 T r PV + = 1 1 \$ Ordinary Annuities PV of Perpetuity of \$1 starting from next period: r PV 1 = FV of Perpetuity of \$1 starting from next period: = FV PV of ordinary annuity of \$1 for “T” periods: ( 29 + - = T r r PV 1 1 1 1 \$ FV of ordinary annuity of \$1 for “T” periods: ( 29 - + = 1 1 1 \$ T r r FV PV of growing perpetuity of \$1 to be received next period with a growth rate “g”: ( 29 g r PV - = 1 \$ PV of growing annuity with a cash flow of \$1 in period “1” that grows at a rate of “g” until “T” periods: ( 29 ( 29 ( 29

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Unformatted text preview: + +--= T r g g r PV 1 1 1 1 \$ Annuity Due FV of annuity due: (FV of ORDINARY ANNUITY)*(1+r) Continuous Compounding Future value of \$1 received today after “T” periods: 718 . 2 , 1 \$ = e where rT e Compounding Future Value after “T” years of \$1 with compounding at an annual interest rate “r” for “m” times per year: mT m r + 1 1 \$ Effective Annual Interest rate (EAIR) The effective annual interest rate when “r” i s the stated interest rate and “m” is the compounding period: 1 ) 1 (-+ m m r...
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Time Value Formulas - -= T r g g r PV 1 1 1 1 \$ Annuity Due...

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