Finite Math Examples

f = 3000

$f = 3000$ ,

r = 6 %

$r = 6 %$ ,

t = 6

$t = 6$

Step 1

Present value is the value on a given date of a future payment or series of future payments, discounted to reflect the time value of money and other factors such as investment risk.

P V = \frac{f}{{(1 + r)}^{t}}

$P V = \frac{f}{{(1 + r)}^{t}}$

Step 2

Substitute the values into the formula.

P V = \frac{3000}{{(1 + 6 %)}^{6}}

$P V = \frac{3000}{{(1 + 6 %)}^{6}}$

Step 3

Simplify the right side.

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Step 3.1

Simplify

\frac{3000}{{(1 + 6 %)}^{6}}

$\frac{3000}{{(1 + 6 %)}^{6}}$ .

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Step 3.1.1

Simplify the denominator.

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Step 3.1.1.1

Convert

6 %

$6 %$ to a decimal.

P V = \frac{3000}{{(1 + 0.06)}^{6}}

$P V = \frac{3000}{{(1 + 0.06)}^{6}}$

Step 3.1.1.2

Add

1

$1$ and

0.06

$0.06$ .

P V = \frac{3000}{{1.06}^{6}}

$P V = \frac{3000}{{1.06}^{6}}$

Step 3.1.1.3

Raise

1.06

$1.06$ to the power of

6

$6$ .

P V = \frac{3000}{1.41851911}

$P V = \frac{3000}{1.41851911}$

P V = \frac{3000}{1.41851911}

$P V = \frac{3000}{1.41851911}$

Step 3.1.2

Divide

3000

$3000$ by

1.41851911

$1.41851911$ .

P V = 2114.88162131

$P V = 2114.88162131$

P V = 2114.88162131

$P V = 2114.88162131$

P V = 2114.88162131

$P V = 2114.88162131$

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