To simplify heres the base formula of compound interest. An example of the present value with continuous compounding formula would be an individual who in two years would like to have 1100 in an interest account that is providing an 8 continuously compounded return. The above formula will calculate the present value interest factor which you can then use to multiple by your future sum to be received.
P Principle i interest rate in percentage terms n number of compounding.
Use of Present Value Formula The Present Value formula has a broad range of uses and may be applied to various areas of finance including corporate finance banking finance and investment finance. PVIF dfrac a 1r n PVIF 1 rna a the future sum to be received. In formula terms this would be 1 1i n. Gross figure x 1 interest rate per period.