BU283 Lecture Notes - Lecture 12: Cash Flow, Nasdaq Composite
Document Summary
Future value - compound interest over multiple period. You have to future value formula each cash flow stream based on the rate and compounding periods. When you have done that, sum each future value to find out the future value of aggregate cash flows. Solving for interest rate given fv and pv and compounding periods. Solve for compounding periods given fv and pv and interest rate. ** note use the simple pv calculation based on annual compounding periods. If you are asked for the annual average compound growth rate, just calculate the interest rate which is included in the excel models. An annuity within a cash flow stream that includes other payments other than the fixed series of payments. The . 69 value above is the present value at period 3. We need to discount it back to period 0. So, take your present value at period three and divide it by (1+i)^n.
