# Thread: Present Value, Future Value, Rate

1. Originally Posted by neverlosehope
If a person borrowed $2000 at 15%on the first of June 2000 to pay it in two equal times: the first on December 1st, 2000 & the other on June 1st,2001 & if the datum date was June 1st,2000. Calculate the value of each payment X?? p= m/(1+rt) ...........this is the formula given 2000= X/(1+0.15*6/12) + X/(1+0.15*12/12) ....the interest is applied per year. we have 2 payments, one is after 6 months, the other is after a year. 6 months is 6/12 of a year (since we have 6 out of 12 months--so it's half a year), so we plug in 6/12 for t in the first part. 12/12 means 12 months out of 12 months, which is just one, so that's when the interest is applied after one year, so we put that for t in the second part of the formula. 15% = 0.15 as i explained earlier, so that is what we plug in for r in both parts of the formula. and now we just need to solve for x we get, 2000 = x/1.075 + x/1.15 ........adding these fractions we get 2000 = 1.799797776x => x = 2000/1.799797776 = 1111.24 if the datum date was changed to be 1/6/2001.calculate the value of each payment. M= p(1+rt) M= 2000 (1+0.15*1)= 2300 So, 2300 = X (1 + 0.15 * 6/12) + X 2300=2.075 X X= 1108.43 .....here we just applied the formula with p = 2000, t = 1 since it's after 1 year, r = 0.15 = 15% and solved for x for the first: x/1.075 + x/1.15 = x(1/1.075 + 1/1.15) if we factor out the x so we just add the numbers in the brackets to get the coefficient of x, and then we divide both sides by that number to get x by itself on one side of the equation 2. So, 2300 = X (1 + 0.15 * 6/12) + X 2300=2.075 X X= 1108.43 I can understand that part 3. we got the answer here: M= p(1+rt) M= 2000 (1+0.15*1)= 2300 this after one year so, why we did this step: So, 2300 = X (1 + 0.15 * 6/12) + X 2300=2.075 X X= 1108.43 I can understand that part 4. Originally Posted by neverlosehope So, 2300 = X (1 + 0.15 * 6/12) + X 2300=2.075 X X= 1108.43 I can understand that part here the interest is applied after the 6 month period, so only the first payment would be affected by the interest. since the second payment is 6 months after that, interest would not be applied to it. so if x is the amount we pay each time, we add the interest the first time, and no interest the second time these are weird questions though 5. ok i understand that but, i think we don't need to write this step in the exam right? 6. Originally Posted by neverlosehope ok i understand that but, i think we don't need to write this step in the exam right? i believe so, yes. they used it to get to the answer after all. 7. I don't really what to say thank you soooooo much i have an exam after few hours so thank you soo much 8. Originally Posted by neverlosehope I don't really what to say thank you soooooo much i have an exam after few hours so thank you soo much well, good luck with that. business math is wierd ...kind of like some of the math in economics 9. The exam problems: simpe interest present value value equation compoud interest discount partial paument(Usa rule) Anuitties Amortization & amortization schedual But, i think every thing is gonna be fine 10. ## Wowwwwwwwwwwwwwwwwww It's my last Exammm 11. ## Q Can you tell me how to solve these kind of problems How to differetiate between the M & P & when i read the problem what's the first thing i have to think of. THanks 12. Originally Posted by neverlosehope Can you tell me how to solve these kind of problems How to differetiate between the M & P & when i read the problem what's the first thing i have to think of. THanks P is for Principal. it is the original amount that we started with. So in your last question, P was the 2000 that was borrowed M is for aMount, it is the amount we get after the interest is applied over some period of time 13. OK all the problem i have read it'a ll about a person indebted or signed a loan for$.... that was due it's m
& all the problems that say a person borrowedn on whatever any day it's p
is that a standred

14. Originally Posted by neverlosehope
OK all the problem i have read
it'a ll about a person indebted or signed a loan for $.... that was due it's m & all the problems that say a person borrowedn on whatever any day it's p is that a standred No, P is what was borrowed and M is what is due 15. OK all the problem i have read it'a ll about a person indebted or signed a loan for$.... that was due it's p & we need to get m
& all the problems that say a person borrowedn on whatever any day it's m & we need to get p

is that a standred

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