# Thread: present value

1. ## present value

1. Calculate the present value for each section using compound interest. A) You need $1,000 in 8 years. You can invest your money at 3%/a compounded semiannually. B) You need$200 in 30 months. You can invest your money at 6%/a compounded monthly.
C) You need $15,000 in 12.5 years. You can invest your money at 4%/a compounded quarterly. 2. Originally Posted by euclid2 1. Calculate the present value for each section using compound interest. A) You need$1,000 in 8 years. You can invest your money at 3%/a compounded semiannually.
A) Future value, F = $1000 interest,$\displaystyle i = \frac{3}{2} \% = 0.015$number of interest periods,$\displaystyle n = 8 \times 2 = 16$Present value, P = ? Future value,$\displaystyle F = (1+i)^n.P$Present value,$\displaystyle P = \frac {F}{(1+i)^n}\displaystyle P = \frac {1000}{(1.015)^{16}}$Now, finish up. 3. Originally Posted by euclid2 1. Calculate the present value for each section using compound interest. B) You need$200 in 30 months. You can invest your money at 6%/a compounded monthly.
B) Future value, F = $200 interest,$\displaystyle i = \frac{6}{12} \% = 0.005$number of interest periods,$\displaystyle n = 30$Present value, P = ? Future value,$\displaystyle F = (1+i)^n.P$Present value,$\displaystyle P = \frac {F}{(1+i)^n}\displaystyle P = \frac {200}{(1.005)^{30}}$Now, finish up. 4. Originally Posted by euclid2 1. Calculate the present value for each section using compound interest. C) You need$15,000 in 12.5 years. You can invest your money at 4%/a compounded quarterly.
C) Future value, F = $15,000 interest,$\displaystyle i = \frac{4}{4} \% = 1\% = 0.01$number of interest periods,$\displaystyle n = 12.5 \times 4 = 50$Present value, P = ? Future value,$\displaystyle F = (1+i)^n.P$Present value,$\displaystyle P = \frac {F}{(1+i)^n}\displaystyle P = \frac {15000}{(1.01)^{50}}\$

Now, finish up.

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