# Thread: Present , future value

1. ## 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

2. 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
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.