### Formula

C

amount of cash flows

PV

present value

n

number of years

i

interest rate or required rate of return

C

amount of cash flows

PV

present value

n

number of years

i

interest rate or required rate of return

Many financial arrangements (including bonds, other loans, leases, salaries, membership dues, annuities, straight-line depreciation charges) stipulate structured payment schedules, which is to say payment of the same amount at regular time intervals. The term annuity is often used to refer to any such arrangement when discussing calculation of present value (PV). A cash flow stream with a limited number (n) of periodic payments (C), receivable at times 1 through n, is an annuity. This formula is used to calculate periodic payments (C) or amount of cash flows.

PV

n

i

C

Precision

- C
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