This preview shows page 1. Sign up to view the full content.
Unformatted text preview: or $1. By letting
PVIFi,n represent the appropriate factor, we can rewrite the general equation for
present value (Equation 4.9) as follows:
PV FVn (PVIFi,n) (4.12) This expression indicates that to find the present value of an amount to be received in a future period, n, we have merely to multiply the future amount, FVn ,
by the appropriate present value interest factor.
FV 8 N
I 8 CPT
918.46 As noted, Pam Valenti wishes to find the present value of $1,700 to be received 8
years from now, assuming an 8% opportunity cost.
Table Use The present value interest factor for 8% and 8 years, PVIF8%, 8 yrs,
found in Table A–2, is 0.540. Using Equation 4.12, $1,700 0.540 $918. The
present value of the $1,700 Pam expects to receive in 8 years is $918.
Calculator Use Using the calculator’s financial functions and the inputs shown
at the left, you should find the present value to be $918.46. The value obtained
with the calculator is more accurate than the...
View Full Document