# Thread: find the present value

1. ## find the present value

achieve 2500 in five years at 8.2 interest compounded monthly

2. Originally Posted by jenzbears
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.

3. 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 $P.$