Editing Time value of money (section)

===Present value of a future sum===
The present value formula is the core formula for the time value of money; each of the other formulas is derived from this formula. For example, the annuity formula is the sum of a series of present value calculations.

The [[present value]] (''PV'') formula has four variables, each of which can be solved for by [[numerical methods]]:
:<math>  PV \ = \ \frac{FV}{(1+i)^n} </math>

The cumulative present value of future cash flows can be calculated by summing the contributions of ''FV<sub>t</sub>'', the value of cash flow at time ''t'':
:<math>  PV \ = \ \sum_{t=1}^{n} \frac{FV_{t}}{(1+i)^t} </math>

Note that this series can be summed for a given value of ''n'', or when ''n'' is ∞.<ref>http://mathworld.wolfram.com/GeometricSeries.html Geometric Series</ref> This is a very general formula, which leads to several important special cases given below.