The present value of a future cash flow equals the future cash flow divided by to the power of n, where r = interest rate per period and n = number of periods until the cash flow occurs.

Question

Quizplus · Accepted Answer

The present value of a future cash flow is calculated by dividing the future cash flow by (1 + r)^n, where r is the interest rate per period and n is the number of periods until the cash flow occurs.

The Present Value of a Future Cash Flow Equals the Future