# another interest theory: present value

• Jan 21st 2007, 11:39 PM
suedenation
another interest theory: present value
Q: Calculate the total present value of the following payments:
\$600 made at the end of each of the years 1 to 8
\$900 made at the end of each of the years 9 to 15
if the annual effective interest rate is 7.5% for the first ten years and 9% thereafter.

I tried to use the present value formula:

PV = X(1+i)^-t

but dun know if it's right or wrong, and does the question have anything to do with the force of interest?

• Jan 22nd 2007, 05:25 PM
JakeD
Quote:

Originally Posted by suedenation
Q: Calculate the total present value of the following payments:
\$600 made at the end of each of the years 1 to 8
\$900 made at the end of each of the years 9 to 15
if the annual effective interest rate is 7.5% for the first ten years and 9% thereafter.

I tried to use the present value formula:

PV = X(1+i)^-t

but dun know if it's right or wrong, and does the question have anything to do with the force of interest?