NOTATION
For the purposes of calculation, these elements are represented by the following variables:
i = effective interest rate per interest period.
= the interest rate per interest period.
N = number of compounding periods.
= the total number of interest periods or the number of compounding periods.
P = present sum of money; the equivalent value of one or more cash flows at a reference
point in time called the present.
= a sum of money at a time chosen for purposes of analysis as time zero, sometimes
referred to as the present value or present worth.
F = future sum of money; the equivalent value of one or more cash flows at a reference
point in time called the future.
= a future sum of money at the end of the analysis period. This sum may be specified
as FN.
A = end-of-period cash flows (or equivalent end-of-period values) in a uniform series
continuing for a specified number of periods, starting at the end of the first period
and continuing through the last period.
= an end-of-period payment or receipt in a uniform series that continues for N periods.
This is a special situation where A1 = A2 = ...= AN.
An = a discrete payment or receipt occurring at the end of some interest period.
Vn = an equivalent sum of money at the end of a specified period n that considers the
effect of time value of money. Note that V0 = P and VN = F. [Note: this symbol is
not used in out text book.]
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