For our FV=PV(1+R)^n, we use a power function. The floor function would give the largest integer smaller than the current value. The remainder is the value that remains after an integer division. Given a positive discount rate, the present value of a future cash flow is always smaller than its corresponding future value.
The following formula specifies the relationship between a present value and its future value:
In this formula, PV is the present value, FV is the future value, R is the cost of capital (discount rate) per period, and n is the number of periods. Assume that we would receive $100 payment in two years and that the annual discount rate is 10 percent. What is the equivalent value today that we are willing to accept?
>>>100/(1+0.1)**2 82.64462809917354
Here, ** is used to perform a power function. The % operator is used to calculate the remainder. Refer to the following example for the implementation of these operators:
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