Compound/Present Value/Annuity/Effective Interest Rate Formulas

Present Value: PV t = CT / (1 + r) T

Compound Value: FV T = Ct x (1 + r) T

Perpetuity: Perpetuity t = Ct+1 / r

Growing Perpetuity: Growth Perpetuity t = Ct+1 / (r - g)

Annuity:
Present Value:
PV Annuity t = Ct+1 x  1 − 1 T
 r r (1 + r) 
Future Value:
(1 + r) -1
T
FV Annuity T = Ct+1 x
 r 
Growing Annuity:

Present Value:
T
PV Growth Annuity t =
Ct+1
r-g
[ (1 + g ) ]
× 1- 1+r
Future Value:
FVGA T = PVGA t x (1+r)T

Where: t = initial period r = interest rate

T = number of periods g = growth rate
Ct = value in initial period CT = value in period T

Conversion of Nominal to Effective Interest Rate:

e = [(1+(r/T)) T] - 1 e = effective annual rate

r = nominal annual rate T = number of compounding periods

Economic Order Quantity = [(2 x annual sales x cost per order)/carrying cost].5

Optimal Cash Balance = [(2 x annual cashflow x cost per transaction)/interest rate].5