## Financial math MYP Present value

number, algebra, geometry and trigonometry, statistics and probability, discrete mathematics.

### Financial math MYP Present value

MYP Math, Financial Mathematics, Compound Interest, Present value

How can we calculate the amount to be deposit into an account to collect $140,000 at the end of 8 years if the account is paying 6% per annum compounded every month? Thanks Lucas Posts: 0 Joined: Mon Jan 28, 2013 8:05 pm ### Re: Financial math MYP Present value MYP Math, 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 (=$140,000), P the principal, r is the interest rate per compound period ($\frac{6}{12}=\frac{1}{2}=0.5$) and n is the number of compounding periods (=8*12=96 months).
Therefore
$\140,000=P \cdot (1+ \frac{1}{200})^{96}$

$\rightarrow P=\frac{140,000}{(1+ \frac{1}{200})^{96}}=\86,733.34$

Hope these help!
nicole

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

### Re: Financial math MYP Present value

Thanks Nicole!!
Lucas

Posts: 0
Joined: Mon Jan 28, 2013 8:05 pm