anyone know the forumla to find present value?

[ElFenix]

given the rate, the period, and the end value?

my tax book (for lawyers who don't do math) only includes a table, not a formula.

 

[iamme]

http://www.expectationsinvesting.com/tutorial1.shtml

is that it?

 

[Atomicus]

I googled something and found

http://www.investopedia.com/articles/03/101503.asp

rushing off to work right after this post, so don't expect the link to be what you're looking for :roll:

 

[ElFenix]

damn, how do i forget google? :shocked:

thanks guys!

 

[axelfox]

multiply by 1.(interest rate) ^n where n = number of years.

 

[Willy Duet]

x / (1+i)^n,

Where x=amount you want to find present value of
i=interest rate
n=number of years

For example, the present value of 10,000 in 5 year at 4% =

10000 / (1+.04)^5 = 8,219.27

 

[chowmein]

wow, haven't seen that problem since HS.

 

[jagec]

F=p*(1+i)^n

 

[ActuaryTm]

Someone asked this not all that long ago, and I recall making a page that was rather straight forward.

Edit: Link.

 

[DaWhim]

Originally posted by: chowmein
wow, haven't seen that problem since HS.

I just have a midterm on that today. what class do they teach that in HS? I never saw that in my hs.

 

[axelfox]

College for me

<--- finance major, forgot almost all of it.

 

[chowmein]

i went to a strict economics and finance HS

 

[TwiceOver]

I=R*T?

 

[Triforceofcourage]

In accounting we don't need the formula and just use the tables

 

[ActuaryTm]

Originally posted by: Triforceofcourage
In accounting we have our actuarial brethren construct simplified tables for us, as we can't understand formulae.

Fixed.

 

[FrustratedUser]

Originally posted by: Willy Duet
x / (1+i)^n,

Where x=amount you want to find present value of
i=interest rate
n=number of years

For example, the present value of 10,000 in 5 year at 4% =

10000 / (1+.04)^5 = 8,219.27

Please remind me not to put money in that bank.

 

[ArmenK]

Originally posted by: FrustratedUser

Originally posted by: Willy Duet
x / (1+i)^n,

Where x=amount you want to find present value of
i=interest rate
n=number of years

For example, the present value of 10,000 in 5 year at 4% =

10000 / (1+.04)^5 = 8,219.27

Please remind me not to put money in that bank.

What do you get at your bank?

 

[ActuaryTm]

Originally posted by: FrustratedUser
Please remind me not to put money in that bank.

Not certain you understand what PV is, in this case.

To reword the example used, an investment of $8,219.27 today would be required to have a future value of $10,000 in five years, at an interest rate of 4% compounded yearly.