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, discounted at a specific rate. This is commonly used in investment analysis and capital budgeting.

2. How Does the Calculator Work?

The calculator uses the present value formula:

Where:

• \( CF_t \) — Cash flow at time period t
• \( r \) — Discount rate (as a decimal)
• \( t \) — Time period

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: PV calculation helps investors and financial analysts determine the value of investments with irregular cash flows, compare investment opportunities, and make informed financial decisions.

4. Using the Calculator

Tips: Enter cash flows as comma-separated values (e.g., "100,200,300"), the discount rate as a percentage (e.g., 5 for 5%), and click Calculate.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between PV of uneven vs. even cash flows?
A: Uneven cash flows require calculating each period separately, while even cash flows can use annuity formulas.

Q2: How does the discount rate affect PV?
A: Higher discount rates result in lower present values, as future cash flows are discounted more heavily.

Q3: What are typical applications of this calculation?
A: Valuing businesses, analyzing investment projects, evaluating bond prices with irregular coupons, etc.

Q4: How should I choose the discount rate?
A: It should reflect the opportunity cost of capital or required rate of return for the investment.

Q5: Can this be used for negative cash flows?
A: Yes, simply include negative values in your cash flow series (e.g., "-100,200,-50").