Finite Math Examples

$f = 5000$ , $r = 4 %$ , $t = 1$

Step 1

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.

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

Step 2

Substitute the values into the formula.

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

Step 3

Simplify the right side.

Tap for more steps...

Step 3.1

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

Tap for more steps...

Step 3.1.1

Simplify the denominator.

Tap for more steps...

Step 3.1.1.1

Convert $4 %$ to a decimal.

$P V = \frac{5000}{{(1 + 0.04)}^{1}}$

Step 3.1.1.2

Add $1$ and $0.04$ .

$P V = \frac{5000}{{1.04}^{1}}$

Step 3.1.1.3

Evaluate the exponent.

$P V = \frac{5000}{1.04}$

Step 3.1.2

Divide $5000$ by $1.04$ .

$P V = 4807.\overline{692307}$