Provide a half page single spaced response to each of the following questions. Cite two sources (APA) for each question and indicate for which question the source was used. No Title Page required
-Describe in detail how to calculate the present value and the future value of a series of cash flows. What is APR? What is EAR? Are they the same thing?
-Describe in detail the differences and similarities in calculating the present value and future value of a lump sum, annuity, perpetuity and A series of unequal (multiple) cash flows.
Question 1. How to calculate the present value and the future value of a series of cash flows
The present value is the value based on the specific date of payment or series of payment made within a specified period. Future value measures a specific amount of money based on interest rates or rate of return. The Present Value of series of cash flows is calculated by substituting the cash flow for a specific period for Future Value, including the interest rate for the same period (DeFusco et al, 2015). Present Value determined by the cash flow for that specific period. For example, if the total number of the period to be calculated is N, the equation for the present value of cash flow series is the sum