Answer to Question #121998 in Financial Math for Abusiufia wamekeni

Question

find the present and future value of 1000 received every month end for 20 years if the interest rate is j12= 12% per annum

Answer 1

To Calculate Present Value:

$$PV = CF\left[\dfrac{1 - (1 + i)^{-n}}{i}\right]$$

In our question, we have:

$CF = 1,000\\[0.3cm] i = \dfrac {0.12}{12} = 0.01\\[0.3cm] n = 20\times 12 = 240$

Therefore:

$$PV = 1,000\left[\dfrac{1 - (1 + 0.01)^{-240}}{0.01}\right]\\[0.3cm] \color{red}{PV = 90,819.42}$$