The formula to calculate the Present Value (PV) of a Future Sum is:
\[ PV = \frac{FV}{\exp(\%RoR \times nPeriods)} \]
Where:
The Present Value of the annuity is the value that determines the value of a series of future periodic payments at a given time.
Let's assume the following values:
Using the formula:
\[ PV = \frac{33000}{\exp(4.5 \times 2)} \]
Evaluating:
\[ PV = 4.07 \]
The Present Value is 4.07.
| Future Value | Rate of Return | Number of Periods | Present Value |
|---|---|---|---|
| 32000 | 4 | 1 | 586.10 |
| 32000 | 4 | 2 | 10.73 |
| 32000 | 4 | 3 | 0.20 |
| 32000 | 4.5 | 1 | 355.49 |
| 32000 | 4.5 | 2 | 3.95 |
| 32000 | 4.5 | 3 | 0.04 |
| 32000 | 5 | 1 | 215.61 |
| 32000 | 5 | 2 | 1.45 |
| 32000 | 5 | 3 | 0.01 |
| 33000 | 4 | 1 | 604.42 |
| 33000 | 4 | 2 | 11.07 |
| 33000 | 4 | 3 | 0.20 |
| 33000 | 4.5 | 1 | 366.60 |
| 33000 | 4.5 | 2 | 4.07 |
| 33000 | 4.5 | 3 | 0.05 |
| 33000 | 5 | 1 | 222.35 |
| 33000 | 5 | 2 | 1.50 |
| 33000 | 5 | 3 | 0.01 |
| 34000 | 4 | 1 | 622.73 |
| 34000 | 4 | 2 | 11.41 |
| 34000 | 4 | 3 | 0.21 |
| 34000 | 4.5 | 1 | 377.71 |
| 34000 | 4.5 | 2 | 4.20 |
| 34000 | 4.5 | 3 | 0.05 |
| 34000 | 5 | 1 | 229.09 |
| 34000 | 5 | 2 | 1.54 |
| 34000 | 5 | 3 | 0.01 |