Analogy step 1-5:
Calculate today’s worth of 10 uniform investments away from 2000 cash becoming invested at the conclusion of each year for focus price several% annually substance a-year.
Having fun with Formula step 1-5, we will see: P = A beneficial * P / A we , letter = Good [ ( step one + we ) letter ? step 1 ] / [ i ( step one + we ) n ] P = An Mexican Sites dating sites excellent * P / An effective several % , 10 = 2000 * [ ( 1 + 0.12 ) ten ? step one ] / [ 0.12 ( 1 + 0.12 ) ten ] P = 2000 * 5.650223 = $ eleven ,
i is the interest rate and you may letter is the quantity of monthly payments. Discover an important assumption here, the first commission must start off seasons step 1. Therefore P / Good i , n have a tendency to return very same expose value of the brand new monthly payments. (more…)