Math Tutor In Miami

How to Find the Present Value

In order to find the present value you need to use this formula:

PV= FV/(1+i)^t

FV= Future value
i= interest rate
t= periods (time)

Remember your compound periods (this is how many times you compound the interest) : 

Annually: 1
Semi-annually: 2
Quarterly: 4
Monthly: 12
Weekly: 56
Yearly: 360

Let's do an example:
Find the present value of $1000 dollars compound quarterly with an interest of 12% for 4 years.

In the financial calculator this is the input to find the present value:

Since you are compounding quarterly first find out the number of periods by multiplying 4 years by 4 periods, therefore you have 4X4= 16 periods, also you need to divide the rate by 4, 12/4 = 3%.

Now you can plug it in the calculator:

N= 16
I= 3
PMT= 0
FV= 1000
PV= -632.52 (the calculator will give you the negative answer but it is positive)