Jun. 1, 2011
Most everyone is familiar with the concept that money placed in a savings account will
grow to a larger amount as the years pass if the money in that account earns interest at a
specified annual compounded rate. For example, $500 invested in a savings account that earns
10% interest compounded annually will grow to become $550 (i.e., $500 × 1.10) after one year,
$605 (i.e., $550 × 1.10) after two years, and $665.50 (i.e., $605 × 1.10) after three years.1
Think about the numerical example just depicted. It took three sequential calculations to
arrive at the $665.50 answer—one calculation for each year involved. If the question had been
posed as involving 12 years or even 25 years, a multitude of tedious, repetitive calculations
would have been required. Is there a shortcut? Yes. If we take the 1.10 multiplier amount from
each of the three parenthetical notations above and simply multiply them together—1.10 × 1.10
× 1.10—we get a numerical factor of 1.331. So, if some reference book could provide us with the
1.331 multiplier as being applicable to a 10% situation over three years, all we would have to do
is take the initial $500 amount put into the savings account and multiply it by 1.331 to get the
very same answer as above—$665.50.
Are there reference materials that provide such multipliers for a variety of interest and
years combinations? Yes, there are, and they are referred to as future value (FV) factors. Such
reference materials are useful because no matter the initial amount invested, a specified
combination of time and interest will always have the same multiplier effect. Thus, future value
factor tables are readily available, depicting a number of possible different interest rates along
one axis and a number of different years along the other.2 In fact, Exhibit 1 presents just such a
1
The 1.10 multiplier comes from the fact that in one year there will be 100% of that year’s starting monetary
amount plus an additional 10% due to a year’s worth of interest having been accumulated at a 10% rate. Thus, 100%
+ 10% = 110%, which converts to an arithmetic multiplier of 1.10.
2
This case explores cash flows on an annual basis. Appendix 1 explains what to do when cash flows occur on a
monthly or quarterly basis.
This case was prepared by Professor Mark Haskins. It was written as a basis for class discussion rather than to
illustrate effective or ineffective handling of an administrative situation. Copyright © 2011 by the University of
Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an email to
sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system,
used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying,
recording, or otherwise—without the permission of the Darden School Foundation.
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table. In it we can find the 10% column and the three-years row and find the multiplier amount at
the intersection of those two table coordinates, and it is 1.331—the same as we determined it
should be. Moreover, if we were using a financial calculator or Excel, the embedded programs in
those tools would derive the exact same multiplier once we entered the data pertaining to years
and interest rate.
In business, the basic question posed above often requires us to reverse the focus. For
example, the question might be some form of “My customer is willing to pay me $665.50 in
three years; what is the equivalent monetary amount, as of today, of that future receipt?” Pause
for just a moment—the same basic interplay of time and interest described in the first example
must be in play in this scenario also…right? Of course, but instead of a current invested
monetary amount growing into a larger future amount due to the compounding of interest, we
must now work with a stipulated future monetary amount and in essence, unwind, roll back in
time, reverse the compounding of interest phenomenon. In this instance, we are being asked to
ascertain the present value (PV)—the value today—of a future monetary amount, using the
relevant interest and year information.
To do that, the process is simply the reverse of what we did earlier. So, if the relevant
interest environment is 10% and the number of years is three, we execute the following three
calculations:
Thus, receiving $665.50 in three years, when the interest rate environment is 10%, is
equivalent to receiving $500 today. In short, this has to be true because as we saw earlier, if we
invest $500 today in a savings account that pays 10% interest, that savings account balance will
grow to become $665.50 in three years. Another way to state this is this: If, over the next three
years, relevant interest rates are 10%, the economic value of $665.50 in three years is exactly
equal to $500 today.
As before, this can become a laborious series of calculations if the number of years
involved is substantial. And, just as before, there is a shortcut. Mathematically, whereas the
compounding of interest phenomenon was a multiplicative mathematical task, the unwinding of
a compounded interest phenomenon must be a divisive mathematical task. Specifically, we find
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that: 1 ÷ 1.10 = 0.90909, and then 0.90909 ÷ 1.10 = 0.82644, and finally, 0.82644 ÷ 1.10 =
0.7513.3 And, if we take 0.7513 × $665.50, we get $500 (with a bit of rounding).
Are there reference materials that provide such factor multipliers for a variety of interest
and year combinations when we are seeking to derive the present value of a future monetary
amount? Yes, and they contain a host of PV factors. Such reference materials are useful because
no matter the future amount to be received, a specified combination of time and interest will
always have the same multiplier effect. Exhibit 2 provides an example of such a reference table.
In it, we can find the 10% column and the three-years row and extract the multiplier factor at the
intersection of those two coordinates and it is, just as we thought it should be, 0.7513. (Please
note that the example depicted at the bottom of the table in Exhibit 2 is an additional one,
different from the one discussed here.) Moreover, if we are using a financial calculator or Excel,
the embedded algorithms in those tools use the same factor once we have entered into those tools
the relevant number of years (three) and interest rate (10%).
The two scenarios described above are emblematic of the simplest of situations—they
both started with single monetary amounts to be compounded (the Exhibit 1-related example) or
discounted (the Exhibit 2-related example). In many personal and business financial situations
the reality is that there are multiple cash amounts coming in or going out over the course of a
stipulated time period that are pertinent to the sought-after FV or PV. Let’s lay the foundation for
those sorts of scenarios.
Assume you invest $80 today and at the beginning of each of the next two years for a
total of three such deposits, in a 6% savings account. At the end of three years, what will that
account have in it? Clearly, we could answer that question by applying the technique and
Exhibit 1 factors we described and used in the very first example. That is, we could find the
future value of three lump sums—one of which is invested for three years, one of which is in the
account for two years, and one of which is invested for only one year. In fact, at the bottom of
Exhibit 3, this approach is depicted. But there is an easier, quicker way. Since this scenario
involves three applications of the Exhibit 1 factors, we can develop reference materials that
accumulate the effects of a variety of multiple applications of Exhibit 1’s factors. Indeed, the
Exhibit 3 factors portray such accumulations. Please note that the Exhibit 3 factors are various
summations of sequential Exhibit 1 factor amounts for a given interest rate. For this scenario’s
three deposits in a 6% savings account, the Exhibit 3 factor is 3.375, which is the sum of the
Exhibit 1 6% factors associated with one year, two years, and three years (1.06 + 1.1236 +
1.191, subject to minimal rounding). So 3.375 × $80 = $270, the amount to which three (starting
today) annual invested amounts of $80 each grow to in a 6% account at the end of three years.
3
Some readers may have anticipated, or be interested to note, that the 0.7513 present value multiplier figure can
also be derived by the following: 1 ÷ (1.10)³, which is the same as 1 ÷ 1.331, which indeed equals 0.7513.
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As before, let’s reverse the direction of the time frame. Assume, for example, you are to
receive $70 at the end of each of the next three years. The natural question to arise is, what is the
single present value monetary amount, as of today, that is equivalent to that series of three
receipts? Assuming a 12% interest rate environment, this question can be answered by applying
the technique and Exhibit 2 factors that we used in an earlier example. If we were to pursue that
approach, we would have to execute three separate calculations for each of the three $70
receipts—that approach is depicted at the bottom of Exhibit 4.4 But as we were able to do in
using Exhibit 1 to develop Exhibit 3, we can use Exhibit 2 to develop Exhibit 4, which in turn
can then be used as a shortcut for PV situations with multiple cash flows in the future. Indeed,
Exhibit 4 is simply the summation of Exhibit 2 factors for a variety of time periods within an
interest rate column. So, in this example, we can easily go to Exhibit 4’s 12% column, three-
years row, and find the factor of 2.402, which is the sum (with a bit of rounding) of the pertinent
Exhibit 2 factors (0.8929 + 0.7972 + 0.7118). And 2.402 × $70 = $168.14. The interpretation of
this present value is as follows: In a 12% interest rate environment, receiving $168.14 today is
equivalent to receiving three payments of $70 at the end of each of the next three years.
1. You just turned 35 and have been saving for an around-the-world vacation. You want to
take the trip to celebrate your 40th birthday. You have set aside, as of today, $15,000 for
such a trip. You expect the trip will cost $25,000. The financial instruments you have
invested the $15,000 in have been earning, on average, about 8%. (You may ignore
income taxes.)
a. Will you have enough money in that vacation account on your 40th birthday to take
the trip? What will be the surplus, or shortfall, in that account when you turn 40?
(Hint: Exhibit 1 will be useful in answering this question.)
b. If you had to, you could further fund the trip by making, starting today, five annual
$500 contributions to the account. If you adhered to such a plan, how much will be in
the account on your 40th birthday? (Hint: Exhibit 3 and the answer to part (a) above
will both be useful in answering this question.)
2. Your company has been offered a contract for the development and delivery of a solar-
powered military troop transport vehicle. The request for proposal provides all the
necessary technical specifications and it also stipulates that two working, economically
feasible prototypes must be delivered in four years, at which time you will receive your
only customer payment—a single and final payment of $50 million. Assume a
reinvestment interest rate of 18% for all the monies received over the next four years.
(You may ignore income taxes.)
4
Appendix 2 shows how to adjust the data in Exhibit 4 for cash flows at the beginning (instead of the end) of
the year.
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a. What lump-sum dollar amount would you be willing to accept today instead of the
$50 million in four years? (Hint: Exhibit 2 will be useful in answering this question.)
b. Alternatively, what four yearly receipts, starting a year from now, would you be
willing to accept? (Hint: Exhibit 4 and the answer to part (a) above will both be
useful in answering this question.)
3. The aged but centrally located golf course you manage does not have an in-ground
automated water sprinkling system. Instead, to properly water the course, sprinklers and
hoses must be repeatedly set, moved, and put away by some of the grounds crew—a
tedious and laborious task. If over the next 12 years you project annual savings of about
$40,000 from having an automated system, what is the maximum price you would be
willing to pay today for an installed, automated golf course sprinkler system? (Assume an
interest rate of 6%, and you may ignore income taxes.)
a. Redo your calculation using a 10-year time period and $48,000 in annual savings.
b. Redo your initial calculation one more time using $50,000 in annual savings for the
first six years and $30,000 in annual savings for the next six years.
4. The cafeteria you operate has a regular clientele for all three meals, seven days a week.
You want to expand your product line beyond what you are currently able to offer. To do
so requires the purchase of some additional specialty equipment costing $45,000, but you
project a resultant increase in sales (after deducting the cost of sales) of about $8,000 per
year for each of the next eight years with this new equipment. Assuming a required rate
of return (i.e., a hurdle rate) of 8%, should you pursue this opportunity? Why or why not?
Do the analysis under two conditions:
a. You are part of an income-tax-exempt enterprise.
b. The enterprise you are part of is subject to a 40% corporate income tax rate, and the
straight-line, depreciable life of the equipment you are contemplating purchasing is
five years.
5. You are contemplating the purchase of a one-half interest in a corporate airplane to
facilitate the expansion of your business into two new geographic areas. The acquisition
would eliminate about $220,000 in estimated annual expenditures for commercial flights,
mileage reimbursements, rental cars, and hotels for each of the next 10 years. The total
purchase price for the half-share is $6 million, plus associated annual operating costs of
$100,000. Assume the plane can be fully depreciated on a straight-line basis for tax
purposes over 10 years. The company’s weighted average cost of capital (commonly
referred to as WACC) is 8%, and its corporate tax rate is 40%. Does this endeavor
present a positive or negative net present value (NPV)? If positive, how much value is
being created for the company through the purchase of this asset? If negative, what
additional annual cash flows would be needed for the NPV to equal zero? To what
phenomena might those additional positive cash flows be ascribable?
6. The final tally is in: This year’s operating costs were down $100,000, a decrease directly
attributable to the $520,000 investment in the automated materials handling system put in
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place at the beginning of the year. If this level of annual savings continues for five more
years, resulting in six total years of annual savings, what compounded annual rate of
return will that represent? If these annual savings continue for nine more years, what
compounded annual rate of return will that represent? (You may ignore income taxes.)
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Exhibit 1
DEVELOPING FINANCIAL INSIGHTS:
USING A FUTURE VALUE (FV) AND A PRESENT VALUE (PV) APPROACH
Future Value Factors for a Single Lump Sum Invested Today for n Years:
Exhibit 1 Factors = (1 + Interest)years
Annual Interest Rates
2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Years
1 1.0200 1.0400 1.0600 1.0800 1.1000 1.1200 1.1400 1.1600 1.1800 1.2000
2 1.0404 1.0816 1.1236 1.1664 1.2100 1.2544 1.2996 1.3456 1.3924 1.4400
3 1.0612 1.1249 1.1910 1.2597 1.3310 1.4049 1.4815 1.5609 1.6430 1.7280
4 1.0824 1.1699 1.2625 1.3605 1.4641 1.5735 1.6890 1.8106 1.9388 2.0736
5 1.1041 1.2167 1.3382 1.4693 1.6105 1.7623 1.9254 2.1003 2.2878 2.4883
6 1.1262 1.2653 1.4185 1.5869 1.7716 1.9738 2.1950 2.4364 2.6996 2.9860
7 1.1487 1.3159 1.5036 1.7138 1.9487 2.2107 2.5023 2.8262 3.1855 3.5832
8 1.1717 1.3686 1.5938 1.8509 2.1436 2.4760 2.8526 3.2784 3.7589 4.2998
9 1.1951 1.4233 1.6895 1.9990 2.3579 2.7731 3.2519 3.8030 4.4355 5.1598
10 1.2190 1.4802 1.7908 2.1589 2.5937 3.1058 3.7072 4.4114 5.2338 6.1917
11 1.2434 1.5395 1.8983 2.3316 2.8531 3.4785 4.2262 5.1173 6.1759 7.4301
12 1.2682 1.6010 2.0122 2.5182 3.1384 3.8960 4.8179 5.9360 7.2876 8.9161
13 1.2936 1.6651 2.1329 2.7196 3.4523 4.3635 5.4924 6.8858 8.5994 10.6993
14 1.3195 1.7317 2.2609 2.9372 3.7975 4.8871 6.2613 7.9875 10.1472 12.8392
15 1.3459 1.8009 2.3966 3.1722 4.1772 5.4736 7.1379 9.2655 11.9737 15.4070
16 1.3728 1.8730 2.5404 3.4259 4.5950 6.1304 8.1372 10.7480 14.1290 18.4884
17 1.4002 1.9479 2.6928 3.7000 5.0545 6.8660 9.2765 12.4677 16.6722 22.1861
18 1.4282 2.0258 2.8543 3.9960 5.5599 7.6900 10.5752 14.4625 19.6733 26.6233
19 1.4568 2.1068 3.0256 4.3157 6.1159 8.6128 12.0557 16.7765 23.2144 31.9480
20 1.4859 2.1911 3.2071 4.6610 6.7275 9.6463 13.7435 19.4608 27.3930 38.3376
example (assuming 10%):
Toda y 1 2 3
Start here
$100
× 1.10 $110 × 1.10 $121 × 1.10 $133.10
Exhibit 2
DEVELOPING FINANCIAL INSIGHTS:
USING A FUTURE VALUE (FV) AND A PRESENT VALUE (PV) APPROACH
Present Value Factors for a Single Amount n Years in the Future:
Exhibit 2 Factors = 1 ÷ Exhibit 1 Table Factor in the Same Cell
Annual Interest Rates
2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Years
1 0.9804 0.9615 0.9434 0.9259 0.9091 0.8929 0.8772 0.8621 0.8475 0.8333
2 0.9612 0.9246 0.8900 0.8573 0.8264 0.7972 0.7695 0.7432 0.7182 0.6944
3 0.9423 0.8890 0.8396 0.7938 0.7513 0.7118 0.6750 0.6407 0.6086 0.5787
4 0.9238 0.8548 0.7921 0.7350 0.6830 0.6355 0.5921 0.5523 0.5158 0.4823
5 0.9057 0.8219 0.7473 0.6806 0.6209 0.5674 0.5194 0.4761 0.4371 0.4019
6 0.8880 0.7903 0.7050 0.6302 0.5645 0.5066 0.4556 0.4104 0.3704 0.3349
7 0.8706 0.7599 0.6651 0.5835 0.5132 0.4523 0.3996 0.3538 0.3139 0.2791
8 0.8535 0.7307 0.6274 0.5403 0.4665 0.4039 0.3506 0.3050 0.2660 0.2326
9 0.8368 0.7026 0.5919 0.5002 0.4241 0.3606 0.3075 0.2630 0.2255 0.1938
10 0.8203 0.6756 0.5584 0.4632 0.3855 0.3220 0.2697 0.2267 0.1911 0.1615
11 0.8043 0.6496 0.5268 0.4289 0.3505 0.2875 0.2366 0.1954 0.1619 0.1346
12 0.7885 0.6246 0.4970 0.3971 0.3186 0.2567 0.2076 0.1685 0.1372 0.1122
13 0.7730 0.6006 0.4688 0.3677 0.2897 0.2292 0.1821 0.1452 0.1163 0.0935
14 0.7579 0.5775 0.4423 0.3405 0.2633 0.2046 0.1597 0.1252 0.0985 0.0779
15 0.7430 0.5553 0.4173 0.3152 0.2394 0.1827 0.1401 0.1079 0.0835 0.0649
16 0.7284 0.5339 0.3936 0.2919 0.2176 0.1631 0.1229 0.0930 0.0708 0.0541
17 0.7142 0.5134 0.3714 0.2703 0.1978 0.1456 0.1078 0.0802 0.0600 0.0451
18 0.7002 0.4936 0.3503 0.2502 0.1799 0.1300 0.0946 0.0691 0.0508 0.0376
19 0.6864 0.4746 0.3305 0.2317 0.1635 0.1161 0.0829 0.0596 0.0431 0.0313
20 0.6730 0.4564 0.3118 0.2145 0.1486 0.1037 0.0728 0.0514 0.0365 0.0261
example (assuming 8%):
Toda y 1 2 3
$200.00 Start here
*difference between $158.77 and $158.76 due to rounding
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Exhibit 3
DEVELOPING FINANCIAL INSIGHTS:
USING A FUTURE VALUE (FV) AND A PRESENT VALUE (PV) APPROACH
Future Value Factors for a Series of Invested Amounts at the Beginning of n Years:
Table Factors = Sum of Exhibit 1 Factors for Corresponding Cell
and All Preceding Cells for that Interest Rate
Annual Interest Rates
2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Years
1 1.020 1.040 1.060 1.080 1.100 1.120 1.140 1.160 1.180 1.200
2 2.060 2.122 2.184 2.246 2.310 2.374 2.440 2.506 2.572 2.640
3 3.122 3.246 3.375 3.506 3.641 3.779 3.921 4.066 4.215 4.368
4 4.204 4.416 4.637 4.867 5.105 5.353 5.610 5.877 6.154 6.442
5 5.308 5.633 5.975 6.336 6.716 7.115 7.536 7.977 8.442 8.930
6 6.434 6.898 7.394 7.923 8.487 9.089 9.730 10.414 11.142 11.916
7 7.583 8.214 8.897 9.637 10.436 11.300 12.233 13.240 14.327 15.499
8 8.755 9.583 10.491 11.488 12.579 13.776 15.085 16.519 18.086 19.799
9 9.950 11.006 12.181 13.487 14.937 16.549 18.337 20.321 22.521 24.959
10 11.169 12.486 13.972 15.645 17.531 19.655 22.045 24.733 27.755 31.150
11 12.412 14.026 15.870 17.977 20.384 23.133 26.271 29.850 33.931 38.581
12 13.680 15.627 17.882 20.495 23.523 27.029 31.089 35.786 41.219 47.497
13 14.974 17.292 20.015 23.215 26.975 31.393 36.581 42.672 49.818 58.196
14 16.293 19.024 22.276 26.152 30.772 36.280 42.842 50.660 59.965 71.035
15 17.639 20.825 24.673 29.324 34.950 41.753 49.980 59.925 71.939 86.442
16 19.012 22.698 27.213 32.750 39.545 47.884 58.118 70.673 86.068 104.931
17 20.412 24.645 29.906 36.450 44.599 54.750 67.394 83.141 102.740 127.117
18 21.841 26.671 32.760 40.446 50.159 62.440 77.969 97.603 122.414 153.740
19 23.297 28.778 35.786 44.762 56.275 71.052 90.025 114.380 145.628 185.688
20 24.783 30.969 38.993 49.423 63.002 80.699 103.768 133.841 173.021 224.026
example (using 6%):
Toda y 1 2 3
Start here
from Exhibit 1
$80 $80 $80
× 1.06 = $84.80
× 1.1236 $89.89
× 1.191 = $95.28
$269.97
Exhibit 4
from Exhibit 2
$70 $70 $70 Start here
$62.50 .8929 ×
$55.80 .7972 ×
$49.83 .7118 ×
$168.13
OR: $70.00 × 2.402 = 168.14*
(So: PV amount = Exhibit 4 factor × FV amounts)
*difference between $168.13 and $168.14 due to rounding
^ See Appendix 2 for a discussion of how to use this Exhibit when cash flows begin immediately.
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Appendix 1
DEVELOPING FINANCIAL INSIGHTS:
USING A FUTURE VALUE (F) AND A PRESENT VALUE (PV) APPROACH
What to Do When Cash Flows Occur on a Monthly or Quarterly Basis
All the examples in this case involve annual time periods. It is not unusual for payments
or receipts of cash to occur on a monthly or even a quarterly basis. There is an easy adjustment
process to accommodate such alternative time frames. All that is required is to note that, unless
stated otherwise, interest rates are always assumed to involve annual compounding. Thus, if the
scenario under consideration involves quarterly cash flows, the vertical axes of the tables in
Exhibit 1 through Exhibit 4 can be assumed to pertain to the number of quarters (instead of
years) and the stated annual interest rate must be divided by 4 (because there are four quarters
per year) before picking the appropriate interest rate column to use in the tables. So, if the desire
is to ascertain the PV of a series of quarterly payments, beginning at the end of the first quarter,
for the next three years, and the pertinent annual interest rate is 16%, these are the two required
adjustments for using the tables:
1. The number of periods to use on the tables’ vertical axes is 12 (3 years × 4 quarters per
year).
2. The interest rate to use on the tables’ horizontal axes is 4% (16% annual rate ÷ 4
compounding quarters per year).
In short, for a quarterly series of cash flows, we adjust the table axes coordinates by
scaling up the number of periods by a multiple of 4 and scaling down the interest rate by a
divisor of 4. Similarly, for a monthly series of cash flows, we adjust the table axes coordinates by
scaling up the number of periods by a multiple of 12 and scaling down the interest rate by a
divisor of 12.1
1
Note: Technically, an interest rate of 16% compounded annually is not equivalent to a 4% rate compounded
quarterly. The reason is that the interest earned on a quarterly basis is itself subject to the next quarter’s
compounding, quarter after quarter. For example, $100 earning interest at a 16% annually compounded rate will
grow to $116 at the end of one year. On the other hand, $100 earning interest at the rate of 4% compounded
quarterly will grow to $117 at the end of one year. The fact that the two scenarios are not identical is assumed to be
immaterial, and thus the adjustments described above are common when using FV and PV tables.
Appendix 2
DEVELOPING FINANCIAL INSIGHTS:
USING A FUTURE VALUE (FV) AND A PRESENT VALUE (PV) APPROACH
Adjusting Exhibit 4 for Cash Flows at the Beginning (Instead of the End) of the Year
example (using 12%):
Toda y 1 2 3
$55.80 .7972 ×
_______
$188.30 from Exhibit 4
At times, the series of cash flows for which a present value amount needs to be calculated
begins at the start of each year as opposed to the end of each year. The discussion and example
depicted in Exhibit 4 identifies the cash flows according to this latter pattern. It is not unusual,
however, for the series of cash flows to begin immediately as depicted in the following revised
Exhibit 4 example. Please note there are still three annual cash flows, they simply now begin at
the start of their respective years.
Exhibit 4 can still be used to ascertain today’s PV of this series of cash flows. The way to do
that involves two steps. First, use the appropriate interest rate column (12% in this example) and
use the two-years row, instead of the three-years row as originally done. In Exhibit 4, that factor
is 1.69, and it will be used to PV all the cash flow amounts except the very first one. Second,
because the first cash flow item occurs today, its PV is equivalent to the cash flow amount itself.
So, to value it, we simply add 1.0 to the 1.69 factor pertaining to the other cash flow amounts in
the example, arriving at an adjusted table factor of 2.69. Using that adjusted factor in the
following fashion, $70.00 × 2.69 = $188.30, we get the PV of a series of three annual amounts of
$70 each, where the series begins today (immediately), as equaling $188.30. In the above
depiction, this is verified by discounting each of the three amounts separately (using Exhibit 2
factors) and obtaining the same total PV amount.
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