Q. Show the Compound Value of the Single Flow ?
Compound Value of the Single Flow (Lump Sum):- The process of computing future value becomes very cumbersome if they have to be computed over long maturity periods 10 to 20 years. A generalized process for computing the future value of a single cash flow compounded annually is as follows:
FV = PV (1+i) n
Where FV = Future value of the preliminary flow in n years
PV= Initial Cash flow
i= Annual rate of interest
n = No. of years for which compounding is done.