Financial mathematics Present value

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Financial mathematics Present value

Postby William » Tue Apr 23, 2013 4:15 am

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
 
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Joined: Mon Jan 28, 2013 8:07 pm

Re: Financial mathematics Present value

Postby nicole » Tue Apr 23, 2013 4:23 am

IB Mathematical Studies, Financial Mathematics, Compound Interest, Present value

The general compounding formula is:


Where F is the future value of the investment (=$40,000), P the principal, r is the interest rate per compound period () and n is the number of compounding periods (=3*12=36 months).

Therefore


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
 
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Re: Financial mathematics Present value

Postby William » Tue Apr 23, 2013 4:30 am

Thanks Nicole!
William
 
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Joined: Mon Jan 28, 2013 8:07 pm


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