What types of series are provided?
FinFlow lets you set up cash flows using a wide variety of payment series.
Uniform series
Many situations involve a uniform series of payments: mortgage payments and other loan payments are typically equal payment series.
To set them up, just leave the change type set to "no change".
Arithmetic gradients
Sometimes payments increase by a fixed amount. Payments typically start at an initial value A which is then increased by an amount G for each consecutive payment.
Example: The maintenance cost for a piece of machinery is estimated as follows:
| Year | Maintenance cost |
| 1 | $120 |
| 2 | $150 |
| 3 | $180 |
| 4 | $210 |
| 5 | $240 |
In this example A is $120 and G is $30. To set up this cash flow, add a single event with the following values:
| Comment | Type | Occurs | Date | Amount | Occurrences | Change | Step |
| Maintenance | outflow | annually | 1-1-2004 | 120 | 5 | 30 (amount) | 1 |
•You wish to know the net present value on 1-1-2003 for an anually compounded interest rate of 5 %.
To calculate the net present value, enter the rate and add an event of type unknown:
| Comment | Type | Occurs | Date | Amount | Occurrences | Change | Step |
| Present value | unknown | once | 1-1-2003 | 1 | |||
| Maintenance | outflow | annually | 1-1-2004 | 120 | 5 | 30 (amount) | 1 |
Answer: on 1-1-2003 the net present value of the cash flow is $766.65 at 5 % compounded annually.
• What is the equivalent annual cash flow for the machine?
| Comment | Type | Occurs | Date | Amount | Occurrences | Change | Step |
| Annual cost | unknown | annually | 1-1-2003 | 1 | 5 | none | |
| Maintenance | outflow | annually | 1-1-2004 | 120 | 5 | 30 (amount) | 1 |
Answer: the equivalent annual cash flow is $177.08.
Geometric gradients
A series that does not change by a fixed amount but by a fixed percentage is a geometric gradient.
Example: The maintenance cost for a piece of machinery is estimated to increase by 10 % each year:
| Year | Maintenance cost |
| 1 | $100.00 |
| 2 | $110.00 |
| 3 | $121.00 |
| 4 | $133.10 |
| 5 | $146.41 |
In this example A is $120 and G is $30. To set up this cash flow, add a single event with the following values:
| Comment | Type | Occurs | Date | Amount | Occurrences | Change | Step |
| Maintenance | outflow | annually | 1-1-2004 | 120 | 5 | 10 (percentage) | 1 |
To calculate the net present value, the net future value or the equivalent annual cash flow, add the corresponding events as in the arithmetic gradient example.
Stepped gradients
You may have noticed that in the previous examples the step size was set to 1. FinFlow allows you to create gradients which increase by a given amount or percentage after every 2nd, 3th, ... up to every 12th occurrence.
Example: A machine produces a monthly income of $100, which decreases by 2 % each year for five years:
| Comment | Type | Occurs | Date | Amount | Occurrences | Change | Step |
| Income | inflow | monthly | 1-1-2004 | 100 | 60 | -2 (percentage) | 12 |