The table below lists different financial securities and how you can determine the present values of these:

|Year|0|1|2...|...t-1|t|t+1|Present Value|When to use?|h
|[[Perpetuity]]||1|1...|1|1|1...|$\large \frac{1}{r}$|Use this for an infinite series of yearly payments|
|t-period [[Annuity]]||1|1...|1|1||$\large \frac{1}{r} - \frac{1}{r(1+r)^t}$|Use this when you get a fixed sum paid each year for <t>  periods|
|t-period [[Annuity Due]]|1|1|1...|1|||$\large (1+r)*(\frac{1}{r} - \frac{1}{r(1+r)^t})$|Same as the t-period annuity but payments start immediatly|
|[[Growing Perpetuity]]||1|$1*(1+g)$|$1*(1+g)^t-2$|$1*(1+g)^(t-1)$|$1*(1+g)^t$|$\large \frac{1}{r-g}$|Use this for perpetuities where a yearly, growing cost //g// is involved|
|[[Growing Annuity]]||1|$1*(1+g)$|$1*(1+g)^(t-2)$|$1*(1+g)^(t-1)$||$\large (\frac{1}{r-g} - \frac{1}{r-g} * \frac{(1+g)^t}{(1+r)^t})$|Use this for annuities that grow at rate //g//|

bag
finance_public
created
Sat, 29 Jan 2011 21:28:16 GMT
creator
dirkjan
modified
Sat, 29 Jan 2011 21:28:16 GMT
modifier
dirkjan
tags
M12
Principles of Corporate Finance
Term
creator
dirkjan