Outline
1 Present Value
Present Value
Present Value
-1-
Present Value
Sn
(1 + i )n
-2-
(1)
Present Value
-3-
Present Value
500
(1 + 0.06)10
= 279.20.
-3-
Present Value
-4-
Present Value
90000
(1 + 1.5%)8
= 79894.00
-4-
Present Value
-5-
Present Value
400
300
100
+
+
1
2
(1 + 8%)
(1 + 8%)
(1 + 8%)3
= 673.68.
-6-
Present Value
-7-
Present Value
550
550
+
16
(1 + 2.5%)
(1 + 2.5%)20
= 706.14.
-7-
Present Value
-8-
Present Value
Sol.: Similar as Ex 3 and 4, first convert units and find the present
value as the sum of present of each compounded amounts, i.e., 1
year = 4 quarters, 4% p.a. = 1% per quarter,
P
22000
23000
24000
20000
+
+
+
4
8
12
(1 + 1%)
(1 + 1%)
(1 + 1%)
(1 + 1%)16
= 80415.28.
-9-