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How to Calculate Present Values


This chapter describes the mechanics of calculating present values of lump sum amounts, perpetuities, annuities, growing perpetuities, growing annuities and unequal cash flows. Other related topics like simple interest, frequent compounding, continuous compounding, and nominal and effective interest rates are discussed. Introduces the important concept of value additive property and emphasizes that market interest rates will adjust to prevent "money machines," i.e., to prevent arbitrage.











Brealey: Prin Corp Finance, 9eOnline Learning Center

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