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Math Help - present value

  1. #1
    Senior Member euclid2's Avatar
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    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.
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  2. #2
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    Quote Originally Posted by euclid2 View Post
    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, i = \frac{3}{2} \% = 0.015

    number of interest periods, n = 8 \times 2 = 16

    Present value, P = ?

    Future value, F = (1+i)^n.P

    Present value, P = \frac {F}{(1+i)^n}

    P = \frac {1000}{(1.015)^{16}}

    Now, finish up.
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  3. #3
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    Quote Originally Posted by euclid2 View Post
    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, i = \frac{6}{12} \% = 0.005

    number of interest periods, n = 30

    Present value, P = ?

    Future value, F = (1+i)^n.P

    Present value, P = \frac {F}{(1+i)^n}

    P = \frac {200}{(1.005)^{30}}

    Now, finish up.
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  4. #4
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    Quote Originally Posted by euclid2 View Post
    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, i = \frac{4}{4} \% = 1\% = 0.01

    number of interest periods, n = 12.5 \times 4 = 50

    Present value, P = ?

    Future value, F = (1+i)^n.P

    Present value, P = \frac {F}{(1+i)^n}

    P = \frac {15000}{(1.01)^{50}}

    Now, finish up.
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