
The following cash flow diagram shows a loan from a borrower's point
of view.
Present value (PV)
(Loan)
Money
received
is a
positive
number
Equal periods
Money
paid out Is
a negative
number
1 ^ 2 I 3 4 ^ 5 ^
Payment Payment Payment Payment
(PMT) (PMT) (PMT) (PMT)
Equal payments
(PMT)
Future value
(FV)
18
The following cash flow diagram shows a loan from a lender's point of
Equal payments ^
PMT PMT PMT PMT A
Loan
.
2
__
3 4
Equal periods
PV
PMT
In addition, cash flow diagrams specify when payments occur relative
to the compounding periods: at the beginning of each period or at the
end. The Finance Solver application provides both of these payment
modes: Begin mode and End mode.
18-14 Solving Equations
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