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27 April, 15:26

What is the correct formula for calculating the present value of an investment?

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  1. 27 April, 15:49
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    Vn = V0 (1+i) n

    Vn = Value of cash flow at time n, Vo = Value of cash flow today, i = Interest Rate, n = t.

    Above is the more accurate version of the formula, but you can also use this:

    PV = FV x (1+i) ^ n

    Where PV = present value, FV = future value, i = interest rate (as a decimal, 8.45% = 0.0845), n = the number of periods.
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