Financial Strategy

Present Value of single cash flow example

present_value = future_value / (1 + rate)^periods

e.g. How much do we invest now to have $100 in 5 years invested at 5% p.a.?

present_value = 100 / (1 + 0.05)^5

Future Value of an Annuity

future_value = cash_flow * ((1 + rate)^periods - 1)/rate

We can rearrange this formula to solve for cash_flow cash_flow = future_value / ((1 + rate)^periods - 1)/rate