Read the formula and variables
Each payment is moved to the same time N using the stated constant periodic rate.
| Input | Meaning |
|---|---|
| CF_t | Cash flow at time t |
| N | Chosen common date |
| r | Rate per period |
Check a stated example
Cash 100 at time 1 and 200 at time 3 have time-3 value 310.25 at 5% per period.
The amounts in the example are synthetic. Keep the original precision through the calculation and round only the displayed result.
Check the domain and timing
If N lies before a payment, the negative exponent discounts it back. Keep timing and the rate convention with every term.
A changed date, payment pattern or quotation convention can require a different expression even when the numbers look similar. Identify those features before calculating.