pvvar (Financial Toolbox)

Present value of varying cash flow.

Syntax

pv = pvvar(cf, rate, df)
pv = pvvar(cf, rate)

Arguments

cf: A vector of varying cash flows. Include the initial investment as the initial cash flow value (a negative number).

rate: Periodic interest rate. Enter as a decimal fraction.

df: For irregular (nonperiodic) cash flows, a vector of dates on which the cash flows occur. Enter dates as serial date numbers or date strings. Default assumes cf contains regular (periodic) cash flows.

Description

pv = pvvar(cf, rate, df)

returns the net present value pv of a varying cash flow.

Examples

This cash flow represents the yearly income from an initial investment of $10,000. The annual interest rate is 8%.


Year 1	$2000
Year 2	$1500
Year 3	$3000
Year 4	$3800
Year 5	$5000

To calculate the net present value of this regular cash flow:

pv = pvvar([-10000 2000 1500 3000 3800 5000], 0.08)

returns

pv =
       1715.39

An investment of $10,000 returns this irregular cash flow. The original investment and its date are included. The periodic interest rate is 9%.


Cash flow	Dates
($10000)	January 12, 1987
$2500	February 14, 1988
$2000	March 3, 1988
$3000	June 14, 1988
$4000	December 1, 1988

To calculate the net present value of this irregular cash flow:

cf = [-10000, 2500, 2000, 3000, 4000];
df = ['01/12/1987'
      '02/14/1988'
      '03/03/1988'
      '06/14/1988'
      '12/01/1988'];

pv = pvvar(cf, 0.09, df)

returns

pv =
        142.16