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115 CFA

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115.020.10.50 Reading 6 - Time Value of Money - 5. The Value of a Series of Uneven Cash Flows

# 5. The Future Value and Present Value of a Series of Uneven Cash Flows

## e. calculate and interpret the future value (FV) and present value (PV) of a single sum of money, an ordinary annuity, an annuity due, a perpetuity (PV only), and a series of unequal cash flows;

What is the formula to compute the present value of a series of uneven cash flows over many time periods?

For present value you must find the present value of each individual cash flow and sum them.

How do you calculate the future value of a series of uneven cash flows on the BA II Plus Calculator? Say 1,000, 1,500, 2,000 @ 6% interest?

1. `2ND CF`

(cash flow button)

2. `2ND CLR WORK`

(remove prior work)

3. `DOWN ARROW 1000 ENTER`

4. `DOWN ARROW DOWN ARROW 1500 ENTER`

5. `DOWN ARROW DOWN ARROW 2000 ENTER`

6. `NPV`

7. `6 ENTER`

8. `DOWN ARROW CPT`

= 3,957.63

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- CFA