Finite Math Examples

$f = 650$ , $r = 4 %$ , $t = 13$

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.

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

Step 2

Substitute the values into the formula.

$P V = \frac{650}{{(1 + 4 %)}^{13}}$

Step 3

Simplify the right side.

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Step 3.1

Simplify $\frac{650}{{(1 + 4 %)}^{13}}$ .

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Step 3.1.1

Simplify the denominator.

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Step 3.1.1.1

Convert $4 %$ to a decimal.

$P V = \frac{650}{{(1 + 0.04)}^{13}}$

Step 3.1.1.2

Add $1$ and $0.04$ .

$P V = \frac{650}{{1.04}^{13}}$

Step 3.1.1.3

Raise $1.04$ to the power of $13$ .

$P V = \frac{650}{1.6650735}$

Step 3.1.2

Divide $650$ by $1.6650735$ .

$P V = 390.37315598$