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Finance Basic Formulas

The document outlines formulas for calculating present and future values, including single and multiple compounding scenarios. It also provides specific equations for present and future values of ordinary and due annuities. These formulas are essential for financial calculations involving time value of money.

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nahidnooruddin
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3 views2 pages

Finance Basic Formulas

The document outlines formulas for calculating present and future values, including single and multiple compounding scenarios. It also provides specific equations for present and future values of ordinary and due annuities. These formulas are essential for financial calculations involving time value of money.

Uploaded by

nahidnooruddin
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

1.

0 Present Value
𝐹𝑉
𝑃𝑉 =
(1 + 𝑟)𝑛

1.1 Present Value (Multiple Compounding)

𝐹𝑉
𝑃𝑉 = 𝑟
(1 + 𝑚)𝑚∗𝑛

2.0 Future Value

𝐹𝑉 = 𝑃𝑉(1 + 𝑟)𝑛

2.1 Future Value (Multiple Compounding)

𝑟 𝑚∗𝑛
𝐹𝑉 = 𝑃𝑉(1 + )
𝑚

3.0 Present Value of Annuity (Ordinary)

1 − (1 + 𝑟)−𝑛
𝑃𝑉𝐴 (𝑂𝑟𝑑𝑖𝑛𝑎𝑟𝑦) = 𝑃 ∗
𝑟
or,
1
1 − (1 + 𝑟)𝑛
𝑃𝑉𝐴 (𝑂𝑟𝑑𝑖𝑛𝑎𝑟𝑦) = 𝑃 ∗
𝑟

4.0 Future Value of Annuity (Ordinary)

[1 + 𝑟]𝑛 − 1
𝐹𝑉𝐴 (𝑂𝑟𝑑𝑖𝑛𝑎𝑟𝑦) = 𝑃 ∗
𝑟
5.0 Present Value of Annuity (Due)

1 − (1 + 𝑟)−𝑛
𝑃𝑉𝐴 (𝐷𝑢𝑒) = 𝑃 ∗ ∗ (1 + 𝑟)
𝑟
or,
1
1 − (1 + 𝑟)𝑛
𝑃𝑉𝐴 (𝐷𝑢𝑒) = 𝑃 ∗ ∗ (1 + 𝑟)
𝑟

6.0 Future Value of Annuity (Due)

[(1 + 𝑟)𝑛 − 1] ∗ (1 + 𝑟)
𝐹𝑉𝐴 (𝐷𝑢𝑒) = 𝑃 ∗
𝑟

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