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Math Help - find the present value

  1. #1
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    find the present value

    achieve 2500 in five years at 8.2 interest compounded monthly
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  2. #2
    MHF Contributor
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    Quote Originally Posted by jenzbears View Post
    achieve 2500 in five years at 8.2 interest compounded monthly
    If I understand what you mean, you're looking for the amount today that will give you 2500 after five years.

    Compounded monthly.
    Interest = 8.2% per year = 0.082 a year
    Per compounding, i = 0.082/12 = 0.006833 a month.
    Number of compoundings = 5(12) = 60 months
    So,
    2500 = A(1 +0.006833)^60
    2500 = A(1.006833)^60
    2500 = A(1.504688)
    A = 2500 /1.504688 = 1661.47 -----the amount today, answer.
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  3. #3
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    Hello, jenzbears!

    Achieve 2500 in five years at 8.2% interest compounded monthly
    You're doing Compound Interest problems and you don't know the basic formula?


    . . A \;=\;P(1 + i)^n . where: . \begin{Bmatrix}A & = & \text{future value} \\ P &=&\text{present value} \\ i &=&\text{periodic interest rate} \\ n &=& \text{number of periods}\end{Bmatrix}


    You are given: . \begin{array}{ccc}A &=& 2500 \\ i & = &\frac{0.82}{12} \\ n &=& 60\end{array}

    Plug them in and solve for P.

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