1. What is Present Value of Uneven Cash Flows?

The present value (PV) of uneven cash flows calculates the current worth of future cash flows that are not identical in amount. This is common in real-world investments where returns vary each period.

2. How Does the Calculator Work?

The calculator uses the present value formula for uneven cash flows:

Where:

• \( PV \) — Present Value
• \( CF_t \) — Cash Flow at time period t
• \( r \) — Discount rate per period
• \( n \) — Number of periods

Explanation: Each cash flow is discounted back to the present using the discount rate, then summed to get the total present value.

3. Importance of PV Calculation

Details: Calculating PV of uneven cash flows helps evaluate investment opportunities, compare projects with different cash flow patterns, and make informed financial decisions.

4. Using the Calculator

Tips: Enter the discount rate (as percentage), number of periods, then input each period's cash flow. You can specify the currency symbol (default is $).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between PV of uneven vs. annuity cash flows?
A: Annuity calculations assume identical periodic payments, while uneven cash flows handle varying amounts each period.

Q2: When would I encounter uneven cash flows?
A: Common in business investments, project financing, bond investments with varying coupons, and any investment with non-regular returns.

Q3: How does discount rate affect PV?
A: Higher discount rates reduce present value more significantly, especially for cash flows further in the future.

Q4: Can I calculate NPV with this?
A: Yes, by including the initial investment as a negative cash flow at time period 0.

Q5: What time periods can I use?
A: Any consistent time period (years, quarters, months) as long as the discount rate matches the period.