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What is the present value of 2500 to be received at the beginning of each of 30 periods and discounted at 10 percent compound interest?
Wiki User
∙ 13y ago
The present value of a series of payments with compound interest and payments at the end of a period can be found by the formula:
PV = c * (1-(1+i)^(-n))/i
where 'c' is the amount of the periodic payment,
n is the number of periods, and i is the interest rate per period.
Since you want to find the Present Value for payments starting at the beginning of the period, you would receive 1 payment of 2500 now, which would have a present value of 2500, plus the present value of 29 payments received at the end of the period:
PV = 2500 + 2500 * (1-(1+.10)^(-29))/(0.10) = 25924.01
Wiki User
∙ 13y ago
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