In: Finance
The present value of $200 due in 2 years at a discount rate of 7.5%.
Present Value of future value of money is calculated as follows: | ||||||
Present Value | = | Future Value | * | Discount factor | ||
= | $200.00 | * | 0.865332612 | |||
= | $173.07 | |||||
Working: | ||||||
Discount factor | = | (1+i)^-n | Where, | |||
= | (1+0.075)^-2 | i | = | 0.0750 | ||
= | 0.865332612 | n | = | 2 | ||
Alternatively, | ||||||
Present Value | =-PV(rate,nper,pmt,fv) | Where, | ||||
= $173.07 | rate | = | 0.0750 | |||
nper | = | 2 | ||||
pmt | = | 0 | ||||
fv | = | $200.00 |