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    tk_napper's Avatar
    tk_napper Posts: 2, Reputation: 1
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    #1

    Feb 12, 2008, 04:41 PM
    What is th formula for present value
    What is the formula for present value.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Feb 12, 2008, 07:21 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.
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