Enter the cash flows of up to 5 different time periods along with the average return per period to calculate the present value of uneven cash flows.
Uneven Cash Flow Formula
The following equation is used to calculate the present value of uneven cash flows.
PV = CF0 / (1+r)^0 + CF1/(1-r)^1 + ….CFn/(1+r)^n
- Where PV is the present value
- CF0 – CFn is the cash flows from periods 0 to n.
- r is the interest/return rate
- n is the number of periods
Uneven Cash Flow Definition
Uneven cash flow is typically used to describe the present value of a varying cash flow over a certain number of periods.
Uneven Cash Flow Example
How to calculate the present value of uneven cash flow?
- First, determine the cash flows.
Calculate or measure the cash flows of each individual period.
- Next, determine the number of periods and interest rate.
Determine the interest rate per period and the number of periods.
- Finally, calculate the present value.
Calculate the PV of the uneven cash flows using the equations above.
Uneven cash flows are cash flows that vary in value per period.