Solver Corporate Finance: Calculate Present Value of a fixed cash flow, given Interest Rate and Time period

Source code of 'Corporate Finance: Calculate Present Value of a fixed cash flow, given Interest Rate and Time period'

This Solver (Corporate Finance: Calculate Present Value of a fixed cash flow, given Interest Rate and Time period) was created by by Shruti_Mishra(0)

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About Shruti_Mishra: I am a maths graduate from India and am currently persuing masters in Operations Research.

==section input
Find Present Value (PV) of a fixed cash flow, given Cash flow amount per year (Payments at end of year; positive for inflow, negative for outflow) = $ *[input p=1000], Interest Rate (applicable) = *[input r=5]% and Time = *[input t=2] years.

==section solution
perl

print "To find the <A HREF='lesson_PV.lesson'>present value</A> (PV) of a cash flow, we need to discount the yearly payments (or receipts) by the <A HREF='interest_rate.lesson'>interest rate</A> applicable to the risk associated with the cash flow. 
 
The formula for calculating the <A HREF='lesson_PV.lesson'>PV</A> is
 
 <center>
 {{{PV = sum( Ci/(1+r)^i, i=1, T )}}}
 </center>
 
For a constant cash flow, this becomes
 
 <center>
 {{{PV = C/(1+r)*sum( 1/(1+r)^(i-1), i=1, T ) = C * ((1-1/(1+r)^T)/r)}}}
 </center>

Thus in this case the PV becomes
 
 <center>
 {{{PV = $p * ((1-1/(1+$r/100)^$t)/($r/100))}}} 
 </center>
 
Thus PV = ";
$pv= $p * ((1-(1/((1+$r/100)**$t)))/($r/100));
print "$pv.";
$pvp = int($pv);
==section output
pvp

==section check
  p=1100 r=10 t=1 pvp=1000