Читать книгу Fundamentals of Financial Instruments - Sunil K. Parameswaran - Страница 93

Future value calculations entailed the determination of the terminal value of an initial investment. Sometimes, however, we may seek to do the reverse. That is, we may have a terminal value in mind, and seek to calculate the quantum of the initial investment that will result in the desired terminal cash flow, given an interest rate and investment horizon. Thus, in this case, instead of computing the terminal value of a given principal, we seek to compute the principal that corresponds to a given terminal value. The principal amount that is obtained in this fashion is referred to as the present value of the terminal cash flow.