Introduction for present value equation:
Present value is the given value to find the future value for the payment. Finding present value is used for the flow of the cash in different time. The formula for finding the present value is given below.
Present value = `"Future value"/(1+i)^t`
Where “i” is rate of annual interest and “t” is number of years. I like to share this Solve Absolute Value Equations Calculator with you all through my article.
Examples for Present Value Equation:
Example 1 for present value equation:
Martin needs to deposit $40000 in his bank account to buy a new car in two years. So he want to deposit his money in two years with the rate of interest is 6%. Calculate his present value.
Solution:
Future value is $10000.
Number of years (t) is 2.
Rate of annual interest (i) is 6% of `6/100` = 0.06.
Present value = `"Future value"/(1+i)^t`
Present value = `40000/(1+0.06)^2`
Present value = `40000/(1.06)^2`
Present value = `40000/1.1236`
Present value = 35599.86
Therefore, Martin’s Present value is $ 35,599.86
Example 2 for present value equation:
Paul needs to deposit $45000 in his bank account to buy a new Laptop in two years. So he want to deposit his money in three years with the rate of interest is 8%. Calculate his present value.
Solution:
Future value is $45000.
Number of years (t) is 3.
Rate of annual interest (i) is 8% of `8/100` = 0.08.
Present value = `"Future value"/(1+i)^t`
Present value = `45000/(1+0.08)^3`
Present value = `45000/(1.08)^3`
Present value = `45000/1.259712`
Present value = 35722.45
Therefore, Paul’s Present value is $35,722.45
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Practice Problems for Present Value Equation:
Problem 1 for present value equation:
John needs to deposit $50000 in his bank account to buy a new house in two years. So he want to deposit his money in four years with the rate of interest is 7%. Calculate his present value.
Solution:
John’s present value is $ 38,144.76
Problem 2 for present value equation:
Eric needs to deposit $55000 in his bank account to buy a new computer in two years. So he want to deposit his money in five years with the rate of interest is 9%. Calculate his present value.
Solution:
Eric’s Present value is $ 35,746.23
Problem 3 for present value equation:
Belix needs to deposit $60000 in his bank account to buy a new car in two years. So he want to deposit his money in six years with the rate of interest is 10%. Calculate his present value.
Solution:
Belix’s present value is $ 33,868.44
Present value is the given value to find the future value for the payment. Finding present value is used for the flow of the cash in different time. The formula for finding the present value is given below.
Present value = `"Future value"/(1+i)^t`
Where “i” is rate of annual interest and “t” is number of years. I like to share this Solve Absolute Value Equations Calculator with you all through my article.
Examples for Present Value Equation:
Example 1 for present value equation:
Martin needs to deposit $40000 in his bank account to buy a new car in two years. So he want to deposit his money in two years with the rate of interest is 6%. Calculate his present value.
Solution:
Future value is $10000.
Number of years (t) is 2.
Rate of annual interest (i) is 6% of `6/100` = 0.06.
Present value = `"Future value"/(1+i)^t`
Present value = `40000/(1+0.06)^2`
Present value = `40000/(1.06)^2`
Present value = `40000/1.1236`
Present value = 35599.86
Therefore, Martin’s Present value is $ 35,599.86
Example 2 for present value equation:
Paul needs to deposit $45000 in his bank account to buy a new Laptop in two years. So he want to deposit his money in three years with the rate of interest is 8%. Calculate his present value.
Solution:
Future value is $45000.
Number of years (t) is 3.
Rate of annual interest (i) is 8% of `8/100` = 0.08.
Present value = `"Future value"/(1+i)^t`
Present value = `45000/(1+0.08)^3`
Present value = `45000/(1.08)^3`
Present value = `45000/1.259712`
Present value = 35722.45
Therefore, Paul’s Present value is $35,722.45
Please express your views of this topic Algebra Word Problems by commenting on blog.
Practice Problems for Present Value Equation:
Problem 1 for present value equation:
John needs to deposit $50000 in his bank account to buy a new house in two years. So he want to deposit his money in four years with the rate of interest is 7%. Calculate his present value.
Solution:
John’s present value is $ 38,144.76
Problem 2 for present value equation:
Eric needs to deposit $55000 in his bank account to buy a new computer in two years. So he want to deposit his money in five years with the rate of interest is 9%. Calculate his present value.
Solution:
Eric’s Present value is $ 35,746.23
Problem 3 for present value equation:
Belix needs to deposit $60000 in his bank account to buy a new car in two years. So he want to deposit his money in six years with the rate of interest is 10%. Calculate his present value.
Solution:
Belix’s present value is $ 33,868.44
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