What is the formula for present value.
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What is the formula for present value.
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.
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