Finite Math Examples

$f = 9000$ , $r = 12 %$ , $t = 0.5$

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.

$P V = \frac{9000}{{(1 + 12 %)}^{0.5}}$

Step 3

Simplify the right side.

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Step 3.1

Simplify $\frac{9000}{{(1 + 12 %)}^{0.5}}$ .

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Step 3.1.1

Simplify the denominator.

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Step 3.1.1.1

Convert $12 %$ to a decimal.

$P V = \frac{9000}{{(1 + 0.12)}^{0.5}}$

Step 3.1.1.2

Add $1$ and $0.12$ .

$P V = \frac{9000}{{1.12}^{0.5}}$

Step 3.1.1.3

Raise $1.12$ to the power of $0.5$ .

$P V = \frac{9000}{1.05830052}$

Step 3.1.2

Divide $9000$ by $1.05830052$ .

$P V = 8504.2006427$