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What is present value of interest factor annuity if n3and i3?
The Present Value of Interest Factor Annuity (PVIFA) is calculated using the formula: PVIFA = (\frac{1 - (1 + i)^{-n}}{i}), where (n) is the number of periods and (i) is the interest rate per period. For (n = 3) and (i = 3%) (or 0.03), the PVIFA can be computed as PVIFA = (\frac{1 - (1 + 0.03)^{-3}}{0.03}). This results in a PVIFA value that can be used to determine the present value of an annuity receiving equal payments over three periods at a 3% interest rate.
What is the relationship between present and future value?
The relationship is that present value is the current value of future cash flows discounted at the appropriate discount rate. Future values are the amount a present value investment is worth after one or more periods. We learn everything we can in the present so we have some of the answers for the future and what we don't know we ask the pros about. The difference between the two is contributed by time. The value of something (an asset) may typically increase over a period of time. $100 that you give me today is not the same as $100 you give a year later. There is an interest (or return) that accrues when you pay me $100 a year later. The future value after n years of an amount P where R is the rate of interest (in percentage) is calculated as P(1+R/100)**n : using compound interest. If R =50 (that is 50% rate of return, I know it is high) and n = 2 years, the future value of P is P*1.5*1.5=2.25P where is today's value. The Present value can be calculated from the future value as P = F/( (1+R/100)**n ) It is necessary to measure the value of an amount that is allowed to grow at a given interest over a period. This is how the future value is determined.
Why the proses of discounting and compounding are related?
Discounting and compounding are related because both processes involve the time value of money, reflecting how the value of money changes over time. Compounding calculates the future value of an investment by applying interest over time, while discounting determines the present value of future cash flows by removing the effects of interest. Essentially, discounting is the reverse of compounding; where compounding grows an amount, discounting reduces it to its present value, both using the same interest rate concept. Together, they provide a comprehensive understanding of how money behaves over time in financial contexts.
What is the value of 10000 with a 5 percent interest over 30 years?
see this similar question, problem is done the same way.What_is_the_value_of_10000_with_a_3_percent_interest_over_30_years
What is the interest on R528 at 7 percent simple interest over 2 years?
7% simple annual interest over 2 years = 14% total interest.14% of R528 = R73.92 .
Is the issue price of bonds equal to the present value of the principal plus the present value of the interest?
The price of bonds are not equal to the present value and principal upon purchase. The interest is accrued over a certain time period, then collected.
What is the future value in 3 years of the present value of 102.40?
The answer depends on your assumption about interest rates over the period. Without that information it is ot possible to give a more useful answer.
What is the future value of 450 at an interest rate of 15 percent two years from today?
To calculate the future value (FV) of $450 at an interest rate of 15% over two years, you can use the formula: FV = PV × (1 + r)^n, where PV is the present value, r is the interest rate, and n is the number of years. Plugging in the values: FV = 450 × (1 + 0.15)^2 = 450 × 1.3225 = $594.13. Therefore, the future value of $450 at 15% interest after two years is approximately $594.13.
A loan at 6 percent interest over 5 years What is the total output?
If the interest is simple interest, then the value at the end of 5 years is 1.3 times the initial investment. If the interest is compounded annually, then the value at the end of 5 years is 1.3382 times the initial investment. If the interest is compounded monthly, then the value at the end of 5 years is 1.3489 times the initial investment.
What is appropriate percentage for present value?
The answer depends on the term (length of ime) and the interest rate or inflation rate expected over the period.
What is present value of interest factor annuity if n3and i3?
The Present Value of Interest Factor Annuity (PVIFA) is calculated using the formula: PVIFA = (\frac{1 - (1 + i)^{-n}}{i}), where (n) is the number of periods and (i) is the interest rate per period. For (n = 3) and (i = 3%) (or 0.03), the PVIFA can be computed as PVIFA = (\frac{1 - (1 + 0.03)^{-3}}{0.03}). This results in a PVIFA value that can be used to determine the present value of an annuity receiving equal payments over three periods at a 3% interest rate.
If the interest rate is 0 the future value interest factor equals what?
If the interest rate is 0, the future value interest factor equals 1. This is because, without interest, any amount of money will remain the same over time; thus, the future value of any present amount will be equal to itself. Therefore, regardless of the time period, the future value remains unchanged when the interest rate is 0%.
What is the relationship between present and future value?
The relationship is that present value is the current value of future cash flows discounted at the appropriate discount rate. Future values are the amount a present value investment is worth after one or more periods. We learn everything we can in the present so we have some of the answers for the future and what we don't know we ask the pros about. The difference between the two is contributed by time. The value of something (an asset) may typically increase over a period of time. $100 that you give me today is not the same as $100 you give a year later. There is an interest (or return) that accrues when you pay me $100 a year later. The future value after n years of an amount P where R is the rate of interest (in percentage) is calculated as P(1+R/100)**n : using compound interest. If R =50 (that is 50% rate of return, I know it is high) and n = 2 years, the future value of P is P*1.5*1.5=2.25P where is today's value. The Present value can be calculated from the future value as P = F/( (1+R/100)**n ) It is necessary to measure the value of an amount that is allowed to grow at a given interest over a period. This is how the future value is determined.
What would the present value factor be for sixteen point six five percent over ten years?
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Why the proses of discounting and compounding are related?
Discounting and compounding are related because both processes involve the time value of money, reflecting how the value of money changes over time. Compounding calculates the future value of an investment by applying interest over time, while discounting determines the present value of future cash flows by removing the effects of interest. Essentially, discounting is the reverse of compounding; where compounding grows an amount, discounting reduces it to its present value, both using the same interest rate concept. Together, they provide a comprehensive understanding of how money behaves over time in financial contexts.
What is the value of 10000 with a 5 percent interest over 30 years?
see this similar question, problem is done the same way.What_is_the_value_of_10000_with_a_3_percent_interest_over_30_years
How do you calculate sinking fund depreciation?
To calculate the annual amounts of sinking fund depreciation, you need to know the income-producing life of the machine, as well as the total amount of income (estimated to be) produced by the machine over that period. The actual economic depreciation in the income-producing value over one year is that value which would be necessary for one to put aside in a bank account, compounding interest, in order for the income to be replaced in the first year in which the machine no longer produces income (and subsequent years). If a machine will produce income for five years at a rate of $1000 per year, the income in the sixth year out (and subsequent years) will need to be replaced with interest generated on a theoretical present value deposited in an interest bearing account today. Assuming that the applicable Fed interest rate is 10%, you discount the $1000 sixth year payment to year one by that rate, and this principal (or present value) amount can be considered the sinking fund depreciation for that year. In years two through five, the depreciation will be calculated as this original present value increases with interest compounding. The principal, which is considered the depreciation, increases with each year due to the fact with each passing year, more money must be invested in order re replace lost sixth year income. In addition, the original present value used above is added to the increasing present value, to account for lost income needing to be replaced in years seven and onward. These calculations take place alongside other normal depreciation deductions on the value of the machine asset itself, and theoretically, income tax deductions should be allowed on the sinking fund depreciation as well as the ACRS schedule for the value of the machine.
