presentValue: Compute the present value of a series of cash flows

Description

This function evaluates the present values of a series of cash flows, given occurrence time. Probabilities of occurrence can also be taken into account.

Usage

presentValue(cashFlows, timeIds, interestRates, probabilities, power = 1)

Value

A numeric value representing the present value of cashFlows vector, or the actuarial present value if probabilities

Arguments

cashFlows: Vector of cashFlow, must be coherent with timeIds
timeIds: Vector of points of time where cashFlows are due.
interestRates: A numeric value or a time-size vector of interest rate used to discount cahs flow.
probabilities: Optional vector of probabilities.
power: Power to square discount and cash flows. Default is set to 1

Details

probabilities is optional, a sequence of 1 length of timeIds is assumed. Interest rate shall be a fixed number or a vector of the same size of timeIds. power parameters is generally useless beside life contingencies insurances evaluations.

References

Broverman, S.A., Mathematics of Investment and Credit (Fourth Edition), 2008, ACTEX Publications.

Examples

Run this code

 #simple example
 cf=c(10,10,10)	#$10 of payments one per year for three years
 t=c(1,2,3) #years
 p=c(1,1,1) #assume payments certainty
 #assume 3% of interest rate
 presentValue(cashFlows=cf, timeIds=t, interestRates=0.03, probabilities=p)

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