chocaholiic
Member
how do u kno tell which formula to use?!!?!?!?
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Present Value (1 Viewer)
- Thread starter chocaholiic
- Start date
Digital_Spork
Member
the one called 'present value of an annuity'? 
chocaholiic
Member
thanx pat. BUT THERE ARE TWO ON THE FORM. SHEET
N= (1.r)n - 1 / r(1+r)n
and then N = A/ (1+r)n
N= (1.r)n - 1 / r(1+r)n
and then N = A/ (1+r)n
Jayphen
super disco breakin'
The second is when you know the final balance (A), and the first is when you don't.
poodoorfan
Member
- Joined
- Nov 25, 2004
- Messages
- 124
i guess 1 you use if you know what it's going to be, the one with the A in it, and the other you use if you don't have the final amount that it's going to be.
im pretty sure our teacher said we could just use whichever one we wanted
im pretty sure our teacher said we could just use whichever one we wanted
Digital_Spork
Member
ok, im wrnog
Last edited:
Jayphen
super disco breakin'
Quoted for truthJayphen said:
elisabeth
Member
Ok, so with present value, we're trying to find the single lump sum you need to invest NOW, right? There are two different pieces of info you can use to work this out:
Use N= M [(1.r)n - 1 / r(1+r)^n] (FORMULA A)
- if you know how much the regular contributions (M) are
--------------------------------------------------------------------
use N = A/(1+r)^n (FORMULA B)
- if you know the final value of the person's annuity
---------------------------------------------------------------------
So say you're saving for schoolies, putting away $70 a month for 2 yrs at 9% p.a. compounding monthly, giving you a final amount of $1833, which you can find using the FV formula. Imagine your mum is gonna match the amount you save
If you tell your mum "hey ma, I'm gonna save $70 a month for 2 yrs at 9% p.a. compounding monthly..." then she will use FORMULA A, coz she knows your monthly contributions.
If you tell her "I will have saved $1833..!" then she'll use FORMULA B.
Hope that made sense somehow.
Use N= M [(1.r)n - 1 / r(1+r)^n] (FORMULA A)
- if you know how much the regular contributions (M) are
--------------------------------------------------------------------
use N = A/(1+r)^n (FORMULA B)
- if you know the final value of the person's annuity
---------------------------------------------------------------------
So say you're saving for schoolies, putting away $70 a month for 2 yrs at 9% p.a. compounding monthly, giving you a final amount of $1833, which you can find using the FV formula. Imagine your mum is gonna match the amount you save
If you tell your mum "hey ma, I'm gonna save $70 a month for 2 yrs at 9% p.a. compounding monthly..." then she will use FORMULA A, coz she knows your monthly contributions.
If you tell her "I will have saved $1833..!" then she'll use FORMULA B.
Hope that made sense somehow.
H.S.What?
Member
yep! . good luck
Lois_87
I Love Gorden Tallis!
Use graphics!
If you guys have a graphics calculator just use that! It is so mush easier.
FV- for finding future value
PV- for finding present value.
It reduces your risk of error in typing the equation into your calculator.
If you guys have a graphics calculator just use that! It is so mush easier.
FV- for finding future value
PV- for finding present value.
It reduces your risk of error in typing the equation into your calculator.
chocaholiic
Member
thanx guys
AHHH im smiling now coz u made me think of skooliez!!
new caledonia here i fkn come!
mwa all , goodluck and thanks for all the help!
CHOCA
AHHH im smiling now coz u made me think of skooliez!!
new caledonia here i fkn come!
mwa all , goodluck and thanks for all the help!
CHOCA
fugazi
Member
That's the word on the street.Jayphen said:
fugazi
Member
Oh, Elisabeth, thanks so much for typing that out for me to read on my computer screen.
Have my babies.
Have my babies.