## Financial mathematics Present value

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### Financial mathematics Present value

IB Mathematical Studies, Financial Mathematics, Present value

How can we calculate the amount to be deposit into an account to collect $240,000 at the end of 3 years if the account is paying 8% per annum compounded every month? Thanks William Posts: 0 Joined: Mon Jan 28, 2013 8:07 pm ### Re: Financial mathematics Present value IB Mathematical Studies, Financial Mathematics, Compound Interest, Present value The general compounding formula is: $F=P \cdot (1+ \frac{r}{100})^n$ Where F is the future value of the investment (=$40,000), P the principal, r is the interest rate per compound period ($\frac{8}{12}=\frac{2}{3}$) and n is the number of compounding periods (=3*12=36 months).

Therefore
$240,000=P \cdot (1+ \frac{2}{300})^36=>P=188,941.11$

The guidelines for doing this exercise directly to GDC Casio FX-9860 is
TVM -> F2: Compound Interest -> n=36, I%=8, FV=240,000, P/Y=12, C/Y=12 and then press PV and get your result with a negative sign is PV.

Hope these help
nicole

Posts: 0
Joined: Mon Jan 28, 2013 8:10 pm

### Re: Financial mathematics Present value

Thanks Nicole!
William

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Joined: Mon Jan 28, 2013 8:07 pm

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