or I = t '(Y 2 rPVÞ where t 0 ¼ t=½

or I = t '(Y 2 rPVÞ where t 0 ¼ t=½1 þ rð1 2 tÞ
and PV ¼ Yð1 2 t 0Þ=½1 þ rð1 2 t 0Þ
. In a more general multiperiod setting, trI could also be deferred so that the above illustration would underestimate PV; the exact term in place of trI can be shown to be greater than trI=½1 þ rð1 2 t=ð1 þ rÞÞ
so that: