Finite Math Examples

$f = 5000$ , $r = 7 %$ , $t = 4$

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.

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

Substitute the values into the formula.

$P V = \frac{5000}{{(1 + 7 %)}^{4}}$

Simplify $\frac{5000}{{(1 + 7 %)}^{4}}$ .

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Simplify the denominator.

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Convert $7 %$ to a decimal.

$P V = \frac{5000}{{(1 + 0.07)}^{4}}$

Add $1$ and $0.07$ .

$P V = \frac{5000}{{(1.07)}^{4}}$

Remove parentheses.

$P V = \frac{5000}{{1.07}^{4}}$

Raise $1.07$ to the power of $4$ .

$P V = \frac{5000}{1.31079601}$

Divide $5000$ by $1.31079601$ .

$P V = 3814.47606023$

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