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Cash Flow Value:
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Cash Flow Value represents the worth of future cash flows in today's terms (NPV) or their projected worth in the future (FV). It's a fundamental concept in finance for evaluating investments and financial decisions.
The calculator uses these formulas:
NPV (Net Present Value):
\[ NPV = \sum_{t=1}^{n} \frac{CF_t}{(1 + r)^t} \]FV (Future Value):
\[ FV = CF \times (1 + r)^n \]Where:
Explanation: NPV discounts future cash flows to present value, while FV projects current cash flows to future value.
Details: Cash flow valuation is essential for investment analysis, capital budgeting, and financial planning. It helps compare money amounts at different times.
Tips: Enter cash flow amount, discount rate (as percentage), and number of periods. Select whether you want NPV or FV calculation.
Q1: What's the difference between NPV and FV?
A: NPV calculates present value of future cash flows, while FV calculates future value of current cash flows.
Q2: How do I choose the discount rate?
A: Typically use your required rate of return or cost of capital. For personal finance, might use inflation rate or investment return rate.
Q3: What are typical applications?
A: NPV for investment decisions, FV for savings growth projections, loan calculations, and retirement planning.
Q4: Can I calculate for multiple cash flows?
A: This calculator handles single cash flows. For multiple varying cash flows, you'd need a more advanced calculator.
Q5: What about inflation?
A: The discount rate should account for inflation. Real returns use inflation-adjusted rates.