Time Value of Money Equations

Future value of a single cash flow with compound interest:

Equation 4.11:
𝐹𝐹𝑉𝑉𝑛𝑛   = 𝑃𝑃𝑉𝑉0 (1 + 𝑟𝑟)𝑛𝑛

Future value of a single cash flow with simple interest:

Equation 4.12:
𝐹𝐹𝑉𝑉𝑛𝑛   = 𝑃𝑃𝑉𝑉0 (1 + 𝑛𝑛𝑛𝑛)

Present value of a single cash flow with compound interest:

Equation 4.14:
𝑃𝑃𝑉𝑉0   =  𝐹𝐹𝑉𝑉𝑛𝑛 (1 + 𝑟𝑟)−𝑛𝑛

EAR formula:
Equation 4.15:
𝐴𝐴𝐴𝐴𝐴𝐴 𝐶𝐶𝐶𝐶
𝐸𝐸𝐸𝐸𝐸𝐸  = �1 + �  − 1
𝐶𝐶𝐶𝐶

General formula for finding the present value of a cash flow stream:
Equation 4.16:
𝐶𝐶𝐹𝐹1 𝐶𝐶𝐹𝐹2 𝐶𝐶𝐹𝐹𝑛𝑛
𝑃𝑃𝑉𝑉0   = 1
 + 2
  + ⋯ 
(1 + 𝑟𝑟) (1  + 𝑟𝑟) (1 + 𝑟𝑟)𝑛𝑛

Future value formula for a cash flow stream:

Equation 4.17:
𝐹𝐹𝑉𝑉𝑛𝑛   = 𝐶𝐶𝐹𝐹1 (1  + 𝑟𝑟)𝑁𝑁−1   + 𝐶𝐶𝐹𝐹2 (1  + 𝑟𝑟)𝑁𝑁−2   + ⋯ 𝐶𝐶𝐹𝐹𝑛𝑛

Formula for the present value of a perpetuity:

Equation 4.19:
𝐶𝐶𝐶𝐶
𝑃𝑃𝑉𝑉0   =
𝑟𝑟

These equations are adapted from Chapter 4 of Hickman, K, Byrd, J, & McPherson, M. (2013). Essentials of finance. Bridgepoint Education.