Finite Math Examples

$f = 4000$ , $r = 6 %$ , $t = 5$

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.

$P V = \frac{4000}{{(1 + 6 %)}^{5}}$

Simplify $\frac{4000}{{(1 + 6 %)}^{5}}$ .

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Simplify the denominator.

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Convert $6 %$ to a decimal.

$P V = \frac{4000}{{(1 + 0.06)}^{5}}$

Add $1$ and $0.06$ .

$P V = \frac{4000}{{1.06}^{5}}$

Raise $1.06$ to the power of $5$ .

$P V = \frac{4000}{1.33822557}$

Divide $4000$ by $1.33822557$ .

$P V = 2989.03269146$

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