I have calculated the PV of a set of cashflows over a period of 10 years.
Here is the equation: YEAR/CASHFLOW
- 50,000
- 51,500
- 53,045
- 54,636
- 56,275
- 57,964
- 59,703
- 61,494
- 63,339
- 65,239
PV of the cashflows = $415,940 at a discount rate of 6%
Here's where I get confused:
Now that I know the PV, why then, if I take this amount, $415,940 and I invest it at a rate of 6% pa and each year a negative cashflow, corresponding to the table above, is paid out of the account, why does the figure at the end of year 10, not equal zero? Is that not a reverse of the PV equation?
Using Maple, I get the following . . .