Present Value

Overview


Continuous Time Value


For modeling purposes, it is easier to convert calculations to continuous time compounding. That, we assume that money is continuously compounded at a continuous rate. Because this is done continuously, there are no cashflows that can occur within a period.
{% A = P \times (1 + r/n)^{nt} %}
{% lim _{n->\infty} \: P \times (1 + r/n)^{nt} = P e^{rt} %}
{% P_n = P_0 \times e^{time \times rate} %} 

let futureValue = 100 * Math.exp(rate*time)

let pv = await import('/lib/finance/fixed-income/present-value/v1.0.0/continuous.mjs');
let futureValue = pv.value(100, time, rate);

//alternate computation
let futureValue = pv.value({
  value:100,
  time:time,
  rate:0.03
});

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