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"""

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

"""

def present_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

"""

if discount_rate < 0:

raise ValueError("Discount rate cannot be negative")

if not cash_flows:

raise ValueError("Cash flows list cannot be empty")

present_value = sum(

cash_flow / ((1 + discount_rate) ** i) for i, cash_flow in enumerate(cash_flows)

)

return round(present_value, ndigits=2)

if __name__ == "__main__":

import doctest

doctest.testmod()

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