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tk_napper
Feb 12, 2008, 03:41 PM
What is the formula for present value.
morgaine300
Feb 12, 2008, 06:21 PM
For compounded interest:

FV = PV (1 + i)^n

I prefer to use that equation and just use algebra to solve for PV.

An actual equation for PV is basically just twisting it around to:
FV/
[(1 + i)^n]

Either way, you have to do the parenthesis and exponent first, and then divide FV by your answer.

Where i = interest rate per compounding period, and n = total number of compounding periods. Different books can use different letters there.