P = present value (?)
A = annuity amount (16.27)
n = number of years (10)
i = interest rate (.10)
Formula: P = A[1 - 1/(1 + i)^n] / i
P = 16.27(1 - 1/1.10^10) / .10 = 99.972... (close nuff!?)
16.28 will give you 100.0335...
Hi everybody, I hope I choose the right sub-forum! I'm reading Ricardo's Principles in their second edition, but I'm not good at maths. I would like to ask a thing about "present value".
What's the formula used to get 100 from 10 annuities of 16.27? And where should I put the "10 per cent" in the formula? In a few words, how would you explain the underlined sentence? Sorry for my poor English and thank you in advance!Originally Posted by Mr. David Ricardo