Finance Introduction

Question 1

Future Value Formula

Answer 1

PV(1+r)^N

Question 2

Present Value Formula

Answer 2

PV = FV / (1+r)^n

Question 3

Perpetuity definition and formula

Answer 3

Never ending payment

PV0 = C/r

Question 4

Annuity definition and formula

Answer 4

Stream of level cash flows over a finite number of periods

PV = C((1/r)-(1/(r(1+r)^T)))
t is periods of cashflow

Question 5

Master PV/FV Formula

Answer 5

0 = PV + PMT ((1/r)-(1/(r(1+r)^t)) + (FV/(1+r)^N)

negative numbers are negative as cash flows