# Present , future value

• Jul 12th 2009, 08:50 AM
diehardmath4
Present , future value
Payments of \$1000 and \$7500 were originally scheduled to be paid five months ago and four months from now , respectively. The first payment was not made. What payment two months from now is equivalent to the scheduled payments if money can earn 6 1/4% ?

if the first step is to find the pv then

S = 7500
P =
R = 0.0625
T = 4/12

7500 = P ( 1 + 0.0625 * 4/12 )

7500 = 1.02083P

P = 7346.94p

From there i'm puzzeled on what i should do(Headbang)(Punch)(Angry)
• Jul 13th 2009, 03:23 PM
TKHunny
Quote:

Originally Posted by diehardmath4
Payments of \$1000 and \$7500 were originally scheduled to be paid five months ago and four months from now , respectively. The first payment was not made. What payment two months from now is equivalent to the scheduled payments if money can earn 6 1/4% ?

if the first step is to find the pv then

S = 7500
P =
R = 0.0625
T = 4/12

7500 = P ( 1 + 0.0625 * 4/12 )

7500 = 1.02083P

P = 7346.94p

From there i'm puzzeled on what i should do(Headbang)(Punch)(Angry)

Are you supposed to be using Simple Interest?

You do NOT need the PRESENT Value. You need the value at the time of the payment.

Present Value
\$1000 @ -5
\$7500 @ +4

Value When Due (two months later)
\$1000 @ -7
\$7500 @ +2

Now add them up. \$1000(1 + 0.0625*(7/12)) + \$7500(1 - 0.0625*(2/15))

This is Simple Interest. Other assumptions will produce other values.