When calculating the present value of an annuity, what variable represents each payment made?

In the context of calculating the present value of an annuity, the variable that represents each payment made is typically denoted as C. This variable signifies the cash flow amount that is received or paid at each period of the annuity.

When evaluating the present value, C is crucial because the present value calculation involves discounting each of these cash flows back to their value today, based on a specific discount rate and the number of periods. Understanding that C refers to the regular payment amount helps clarify how future cash flows can be aggregated to determine what they are worth in today's dollars.

In counterpart, PV stands for present value, which is the result of the calculation you are performing. FV refers to future value, which concerns the value of an investment after a certain amount of time at a specific interest rate rather than the periodic payments. The variable r represents the interest rate used to discount the future payments back to present value terms. Each of these other variables holds its importance in finance, but C specifically denotes each annuity payment.