Present Value of a Series or Cash Flows.
So far we have considered only the present value of a single receipt at some future date. In many instances, .especially in capital budgeting decisions, we may be interested in the present value of a series of receipts received by a firm at different time periods. Like compounding, in order to determine the present value of such a mixed. stream of cash inflows, all that is required is to determine the present value of each future payment and then to aggregate them to find the total present value of the stream of cash flows. Symbolically.
If the time value of money is 10 per cent, we can easily find the present value of the following series of yearly payments (Example 2.6 ).