PV = Present value

FV = Future value
CF = Cash Flow
N = Number of Periods
I = Interest Rate
INT = Interest earned
PMT = Payment
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Compounding: the process of going
forward, from PVs to FVs.
Discounting: the process of finding PV, the
reverse of compounding.
Simple interest vs. Compound interest
A series of equal payment at fixed
intervals for a specified number of
periods.
Ordinary Annuity:
Payment at the end of each period
Annuity Due:
Payment at the beginning of each
period
•Future Value of Ordinary Annuity (FVOA)
•Future Value of Annuity Due (FVAD)
•Present Value of Ordinary Annuity (PVOA)
•Present Value of Annuity Due (PVAD)
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Spreadsheet FV(I,N,PMT,PV,Type)
Type = Annuity type
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Spreadsheet FV(I,N,PMT,PV,Type)
Type = Annuity type
 An annuity that continues
forever or has no maturity.
PV or FV
•Nominal or Quoted Rates
•Periodic Rates
•Effective Annual Rates
-Brigham 2013–
-Cabrera 2011-
-Investopedia –