Compounding and discounting

Compounding and discounting

The process of calculating future values = compounding, ie the sum of beginning amount and the interest earned.
The process of finding out the present value = discounting ie the inverse of compounding.
Basically for a single cash flow:
F = P [F/P, i%, N] F = P (1+i)N
!!! The following are the cases for discrete compounding and discrete cash flow.
Case 1. Finding F when A is given
F = A [F/A, i%, N]  
The quantity inside the square brackets = Uniform series compound factor
 
Case 2. Finding P when A is given
P = A [P/A, i%, N]  
The quantity inside the square brackets = Uniform series present worth factor
 
Case 3. Finding A when given F
A = F [A/F, i%, N]  
The quantity inside the square brackets = Sinking fund factor
 
Case 4. Finding A when given P
A = P [A/P, i%, N]  
The quantity inside the square brackets = Capital recovery factor

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