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Math Help - Compounding annually

  1. #1
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    Compounding annually

    Problem-solving: Assuming zero taxes, calculate the present value of a $1000 of future income, compounded annually, to be received at the end of: a) one year, using a discount rate of 5%;
    b) one year, using a discount rate of 10%;
    c) five years, using a discount rate of 5%;
    d) five years, using a discount rate of 10%;
    e) twenty years, using a discount rate of 20%.


    I think I am over complicating this because i freak out when it comes to math.
    Last edited by jewel1877; March 30th 2013 at 05:44 AM. Reason: Juat adding a line of thought
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  2. #2
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    Re: Compounding annually

    Don't get upset...just study...get the compound interest formula ...AVAILABLE IN all algebra books...Vn = V0( 1+ r/100)^n
    Vn the value after n years...Vo the value today..r/100 = rate/100.......
    MINOAS
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  3. #3
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    Re: Compounding annually

    The equation for the simple interest is FVn = PV ( 1+ i ). Where FVn is the Future value at the end of a specific time period, PV is the present value and i is the interest rate.

    this what I have as the formula
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  4. #4
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    Re: Compounding annually

    ok ..then at the end of the first year this formula will give you the FV for 1 year but what is you have 2,3 4,....n years

    then PVn=pPV(1+r/100)^n.... where n is 1,2,3,4.....n years....
    go here and calculate whatever you need for free....
    Compound Interest Calculator
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