In actual life cash flows occurring above a period of time are frequently uneven. For illustration, the dividends declared through the companies will change from year to year, as same payment of interest on loans will vary whether the interest is charged upon a floating rate basis. The current value of a cash flow stream is computed with the assist of the subsequent formula:

Here

 PV_n = present value of a cash flow stream;

At = cash flow occurring at the end of the year;

k = discount rate;

n = duration of the cash flow stream.

Posted Date: 4/9/2013 2:35:42 AM | Location : United States

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