Present value of a series of unequal annual cash flows formula

Tags: placements time value of money

Description of the Present value of a series of unequal annual cash flows formula

Formula for the calculation of the present value of a series of annual cash flows with unequal amounts

P V = \sum_{n = 1}^{N} \frac{F_{n}}{{(1 + i)}^{n}}

F_{n}

Cash flow of year n

i

Annual interest rate

N

Number of periods (years)

n

Number of years between today and the payment of the cash flow