Appendix 4

Note: To convert $1 in the future into a present value apply the factor that matches both the number of years and the interest rate, for example, 6 years, 4 per cent = $0.790.

Present value of annuity of $1

Note: To convert a future cash flow of $1 per period into a present value, apply the factor that matches both the number of years and the interest rate, for example, 6 years, 4 per cent = $5.242.

Future value of $1

Note: To convert $1 today into a future value apply the factor that matches both the number of years and the interest rate, for example, 6 years, 4 per cent = $1.265.

Future value of annuity of $1

Note: To convert a cash flow of $1 per period into its equivalent ‘future value’ at the end of the period, apply the factor that matches both the number of years and the interest rate, for example, 6 years, 4 per cent = $6.633.