present_value.py

"""
Reference: https://www.investopedia.com/terms/p/presentvalue.asp

An algorithm that calculates the present value of a stream of yearly cash flows given...
1. The discount rate (as a decimal, not a percent)
2. An array of cash flows, with the index of the cash flow being the associated year

Note: This algorithm assumes that cash flows are paid at the end of the specified year
"""


defpresent_value(discount_rate: float, cash_flows: list[float]) ->float:
"""
 >>> present_value(0.13, [10, 20.70, -293, 297])
 4.69
 >>> present_value(0.07, [-109129.39, 30923.23, 15098.93, 29734,39])
 -42739.63
 >>> present_value(0.07, [109129.39, 30923.23, 15098.93, 29734,39])
 175519.15
 >>> present_value(-1, [109129.39, 30923.23, 15098.93, 29734,39])
 Traceback (most recent call last):
 ...
 ValueError: Discount rate cannot be negative
 >>> present_value(0.03, [])
 Traceback (most recent call last):
 ...
 ValueError: Cash flows list cannot be empty
 """
ifdiscount_rate<0:
raiseValueError("Discount rate cannot be negative")
ifnotcash_flows:
raiseValueError("Cash flows list cannot be empty")
present_value=sum(
cash_flow/ ((1+discount_rate) **i) fori, cash_flowinenumerate(cash_flows)
 )
returnround(present_value, ndigits=2)


if__name__=="__main__":
importdoctest

doctest.testmod()