11 appendix table a2 presents present value interest

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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. EXAMPLE Input 1700 Function FV 8 N I 8 CPT PV Solution 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...
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This document was uploaded on 03/03/2014 for the course MBA BMMF at Open University Malaysia.

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