Final answer:
The two types of present value tables are the Present Value of 1 Table, used for single future payments, and the Present Value of an Annuity Table, used for a series of periodic payments. The choice of table depends on whether the future cash flow is a lump sum or a series of payments.
Step-by-step explanation:
In the realm of discounted cash flow (DCF) techniques, two distinct types of present value tables may be utilized. The first table is often referred to as the Present Value of 1 Table, and it is used to calculate the present value of a single future payment. In practice, this table assists in determining the current worth of one future sum of money, considering a particular interest rate and time period.
The second table is known as the Present Value of an Annuity Table. This table is employed when calculating the present value of a series of periodic payments, or annuities, using the present value factor for an annuity. It considers the regularity of payments, the interest rate, and the total number of payments.
Choosing between these tables depends on the cash flow's nature. If the cash flow is a lump sum received or paid at one point in the future, the Present Value of 1 Table is used. Alternatively, if it's a regular series of payments, the Present Value of an Annuity Table is the appropriate choice. These tables are crucial for making informed decisions in finance, business investments, governmental projects, and even personal finance matters like determining the present value of lottery payments.