Finite Math Examples

$f = 8000$ , $r = 2000$ , $t = 2$

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.

$P V = \frac{8000}{{(1 + 2000)}^{2}}$

Step 3

Simplify the right side.

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Step 3.1

Simplify the denominator.

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Step 3.1.1

Add $1$ and $2000$ .

$P V = \frac{8000}{2001^{2}}$

Step 3.1.2

Raise $2001$ to the power of $2$ .

$P V = \frac{8000}{4004001}$