The present value annuity calculator is used to calculate what a cash sum received at the end of each period for n periods is worth today, taking into account a discount rate i.
Normally when computing compound interest the compounding period is a discrete interval, annually, quarterly, monthly, weekly etc. There is nothing however to stop the compounding period getting smaller and smaller until eventually interest is calculated on the balance of the principal amount plus accumulated interest on a continuous basis.
The NPV (net present value) of an investment is calculated by adding together the present value of each of the individual cash flows associated with the investment. The purpose of this tutorial is to discuss the effect of taxation and depreciation on each of the investment cash flows and, as a result, on the NPV of the investment itself.
The stock valuation calculator works out the price of a stock using the present value of a growing perpetuity formula. The calculator is based on the Gordon growth model, and assumes dividend payments are growing at a constant rate each period and continue forever.
The present value of a growing annuity formula is used to calculate the present value of a series of periodic payments which increase at a constant rate each period. The payments made at the end of each period, and a discount rate i% is applied.
The Excel NPV function is used to calculate the present value of unequal cash flows in time value of money calculations.
To calculate the net present value of a project, the original investment at the start of the project needs to be deducted from the answer provided by the Excel NPV function.