Finite Math Examples

$f = 1000$ , $r = 5 %$ , $t = 5$

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.

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

Remove parentheses.

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

Substitute the values into the formula.

$P V = \frac{1000}{{(1 + 5 %)}^{5}}$

Simplify $\frac{1000}{{(1 + 5 %)}^{5}}$ .

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Simplify the denominator.

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Convert $5 %$ to a decimal.

$P V = \frac{1000}{{(1 + 0.05)}^{5}}$

Add $1$ and $0.05$ .

$P V = \frac{1000}{{1.05}^{5}}$

Raise $1.05$ to the power of $5$ .

$P V = \frac{1000}{1.27628156}$

Divide $1000$ by $1.27628156$ .

$P V = 783.52616646$

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