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Chapter 9: Financial Features
• Vertical arrows along the horizontal line indicate the cash flow.
An UP arrow indicates inflow (
outflow (
• The calculator considers the cash inflow for each period is
constant. (Even payment.)
2. Determine the time each payment is due.
3. Determine the inflow and outflow and place the present value
4. Complete the diagram with interest (I%), number of payment
186
–
).
For deposits and loan payments, the time each payment is due
(paid at the beginning or the end of the period) makes for a
different cash flow diagram.
Payment due at the end of the period
+
(
)
PV
Cash flow
1
2
–
(
)
Payment due at the beginning of the period
+
(
)
PV
Cash flow
1
2
–
(
)
In this case payment is due at the end of the period.
(PV = $200,000) on the diagram.
We can consider the present value (PV) as a loan and thus
inflow (revenue) from the customer's point of view. So, place the
PV at the top left end of the diagram. We also can consider the
principal interest total (Future value) as outflow (payment). Draw
a vertical line with a DOWN arrow on the top of the diagram.
periods (N), future value (FV), and other required numbers.
+
) and a DOWN arrow indicates
I %
Time flow
PMT
I %
Time flow
–
N
PMT
FV
–
N
1
N
FV
1
N
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