Future Value of a Single Amount

FVn = PV0  (1 + r ) n
(5.1)
Present Value of a Single Amount

FVn
PV0 = (5.2)
(1 + r ) n
the Future Value of an Ordinary Annuity

 (1 + r ) − 1  n

FVn = CF1    (5.3)

 r 
Present Value of an Ordinary Annuity

 CF1   1 
PV0 =    1 − n 
(5.4)
 r   (1 + r ) 
Future Value of an Ordinary Annuity

 CF1    1  
PV0 =    1 − n 
(5.4)
 r    (1 + r ) 
Future Value of an Annuity Due
  (1 + r )n − 1 
  
FVn = CF0     (1 + r ) (5.5)
 r 
Present Value of an Annuity Due

 CF0    1  
PV0 =    1 − n 
 (1 + r ) (5.6)
 r    (1 + r ) 
Perpetuity

PV0 = CF1  r (5.7)

Growing Perpetuity

 CF1 
PV0 =   (5.8)
r−g
Compounding Interest More Frequently Than Annually

mn
 r
FVn = PV0  1 +  (5.9)
 m
Continuous Compounding
 r n
FVn = PV0  e (5.10)
Effective (True) Annual Rate (EAR)

m
 r
EAR = 1 +  − 1 (5.11)
 m
Determining Deposits Needed to Accumulate a Future Sum

 (1 + r )n − 1 
  
CF1 = FVn    (5.12)
 r 
Loan Amortization Schedule

 1 
CF1 = ( PV0  r )  1 − n 
(5.13)
 (1 + r ) 
Finding Interest or Growth Rates

1/ n
 FVn 
r =  − 1 (5.14)
 PV0 
Finding an Unknown Number of Periods
  FVn 
log  
n=  PV0 
(5.15)
log (1 + r )