Finite Math Examples

$f = 4000$ , $r = 7 %$ , $t = 5$

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.

$P V = \frac{4000}{{(1 + (7 %))}^{5}}$

Simplify $\frac{4000}{{(1 + 7 %)}^{5}}$ .

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Remove parentheses.

$P V = \frac{4000}{{(1 + 7 %)}^{5}}$

Simplify the denominator.

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Convert $7 %$ to a decimal.

$P V = \frac{4000}{{(1 + 0.07)}^{5}}$

Add $1$ and $0.07$ .

$P V = \frac{4000}{{(1.07)}^{5}}$

Remove parentheses around $1.07$ .

$P V = \frac{4000}{{1.07}^{5}}$

Raise $1.07$ to the power of $5$ .

$P V = \frac{4000}{1.40255173}$

Divide $4000$ by $1.40255173$ .

$P V = 2851.94471793$

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