What is the formula for the simple present value?
Asked by: Margret Mante | Last update: October 1, 2025Score: 4.1/5 (42 votes)
The present value formula is PV = FV/(1 + i) n where PV = present value, FV = future value, i = decimalized interest rate, and n = number of periods.
What is the present value of $4000 to be received in 6 years at a 7.5 percent interest rate?
Expert-Verified Answer
The present value of $4,000 to be received in 6 years at an interest rate of 7.5% is approximately $2,695.40. The closest answer choice to this value is $2,591.85, which is the best option.
What is the present formula?
The present value formula is calculated as PV=FV/(1+r)n, where PV is the present value, FV is the future value, r is the discount rate, and n is the number of periods.
What is the formula PV?
The ideal gas law (PV = nRT) relates the macroscopic properties of ideal gases.
What is the present value of the simple?
The present value formula PV = FV/(1+i)^n states that present value is equal to the future value divided by the sum of 1 plus interest rate per period raised to the number of time periods.
Calculating Present Values
How do you find the simple present value?
The present value formula is PV = FV/(1 + i) n where PV = present value, FV = future value, i = decimalized interest rate, and n = number of periods. It answers questions like, How much would you pay today for $X at time y in the future, given an interest rate and a compounding period?
What is the formula for the present value method?
PV = FV / (1 + r / n)nt
FV = Future value. r = Rate of interest (percentage ÷ 100) n = Number of times the amount is compounding. t = Time in years.
What is PV and how is it calculated?
Present Value (PV) Calculation Example
Assuming that the discount rate is 5.0% – the expected rate of return on comparable investments – the $10,000 in five years would be worth $7,835 today. Present Value (PV) = $10,000 ÷ (1 + 5%)^5 = $7,835.
What is the nRT equation?
The Ideal Gas Law (PV = nRT) is an equation representing the state of a homogenous mixture of gas, which sets variables of that gas's pressure (P) times volume (V) equal to the amount in moles (n) of that gas multiplied by the ideal gas constant (R) multiplied by its temperature (T).
What is the formula for simple interest?
The formula for simple interest is SI = P × R × T / 100, where SI = simple interest, P = principal amount, R = the interest rate per annum, and T = the time in years.
What is the formula for PV function?
PV can be calculated in Excel with the formula =PV(rate, nper, pmt, [fv], [type]). If FV is omitted, PMT must be included, or vice versa, but both can also be included. Net present value (NPV) is different from PV, as it takes into account the initial investment amount.
What is the perfect present formula?
The present perfect tense formula is: have/has + past participle. The past participle is usually formed by adding -ed or -d to the end of the verb, but there are many irregular verbs in English. Examples: Regular: He has coached the team since 1998.
What is the present value of $1000 to be received in 5 years?
Summary: The present value of $1,000 to be received in 5 years is $548 if the discount rate is 12.78%.
What is the present value of a $7000 payment made in six years when the discount rate is 4 percent?
Hence, the present value is $5,532.28.
How to calculate the PV factor?
Also called the Present Value of One or PV Factor, the Present Value Factor is a formula used to calculate the Present Value of 1 unit n number of periods into the future. The PV Factor is equal to 1 ÷ (1 +i)^n where i is the rate (e.g. interest rate or discount rate) and n is the number of periods.
What is the present value for dummies?
Present value (PV) is the current value of a future sum of money or stream of cash flows. It is determined by discounting the future value by the estimated rate of return that the money could earn if invested.
What is the present value of a $1500 payment made in three years when the discount rate is 8 percent?
Expert-Verified Answer
The present value of a $1500 payment made in three years at a discount rate of 8 percent is approximately $1190.75. This is calculated using the formula PV=(1+r)nFV.
What is the formula for the present value in standard math?
Present Value This calculation takes the future value and divides it by the interest factor (rearranging Formula 9.3 for PV produces FV(1+t)N=PV). This removes the interest and decreases the single payment.
What is the future value of a single cash flow?
The Future Value (FV) of a Single Sum of Cash Flow
r = Rate of interest per period. N = Number of periods (Years). Note that the formula above is based on the time value of money. The factor (1 + r)N is called a future value factor.
Is cost of capital the same as discount rate?
The Bottom Line
The cost of capital refers to the minimum rate of return needed from a project or investment to make it worthwhile, whereas the discount rate is used to discount the future cash flows from that project or investment back to its present value.
Why is a dollar received today worth more than a dollar received in the future?
The time value of money means that a dollar received today may be worth more than the same dollar received in the future. The reason for this is that a dollar received today can be invested. It can earn a return.
What is simple present and formula?
For questions in the simple present, use the formula do/does + [subject] + [root verb]. Examples: Do they play soccer?
How do you find the simple net present value?
To calculate net present value, you need to determine the cash flows for each period of the investment or project, discount them to present value, and subtract the initial investment from the sum of the project's discounted cash flows.
How to calculate PV with PMT?
PV = n (PMT)(1 + i)-1 [This formula is used when the constant growth rate and the periodic interest rate are the same.]