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| − | The table below lists different financial securities and how you can determine the present values of these:
| + | Calculation of present value |
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| − | {| class="wikitable"
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| − | !Year
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| − | !0
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| − | !1
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| − | !2...
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| − | !...t-1
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| − | !t
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| − | !t+1
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| − | !Present Value
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| − | !When to use?
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| − | |-
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| − | |[[Perpetuity|Perpetuity]]
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| − | |
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| − | |1
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| − | |1...
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| − | |1
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| − | |1
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| − | |1...
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| − | |\[\large \frac{1}{r}\]
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| − | |Use this for an infinite series of yearly payments
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| − | |-
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| − | |t-period [[Annuity|Annuity]]
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| − | |
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| − | |1
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| − | |1...
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| − | |1
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| − | |1
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| − | |
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| − | |\[\large \frac{1}{r} - \frac{1}{r(1+r)^t}\]
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| − | |Use this when you get a fixed sum paid each year for <t> periods
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| − | |-
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| − | |t-period [[Annuity Due|Annuity Due]]
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| − | |1
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| − | |1
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| − | |1...
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| − | |1
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| − | |
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| − | |
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| − | |\[\large (1+r)*(\frac{1}{r} - \frac{1}{r(1+r)^t})\]
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| − | |Same as the t-period annuity but payments start immediatly
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| − | |-
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| − | |[[Growing Perpetuity|Growing Perpetuity]]
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| − | |
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| − | |1
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| − | |\[1*(1+g)\]
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| − | |\[1*(1+g)^t-2\]
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| − | |\[1*(1+g)^(t-1)\]
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| − | |\[1*(1+g)^t\]
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| − | |\[\large \frac{1}{r-g}\]
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| − | |Use this for perpetuities where a yearly, growing cost ''g'' is involved
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| − | |-
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| − | |[[Growing Annuity|Growing Annuity]]
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| − | |
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| − | |1
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| − | |\[1*(1+g)\]
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| − | |\[1*(1+g)^(t-2)\]
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| − | |\[1*(1+g)^(t-1)\]
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| − | |
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| − | |\[\large (\frac{1}{r-g} - \frac{1}{r-g} * \frac{(1+g)^t}{(1+r)^t})\]
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| − | |Use this for annuities that grow at rate ''g''
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| − | |-
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| − | |}
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| | [[Category:finance]] | | [[Category:finance]] |
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Revision as of 18:38, 27 August 2020
Calculation of present value
