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what is the formula for the present value of a single sum at compound interest. Single Payment Compound-Amount Factor. A formula is needed to provide a quantifiable comparison between an amount today and an amount at a future time in terms of its present day value.
Calculating Present Value Accountingcoach from www.accountingcoach.com
Value dfrac FV 1 r n PresentValue 1rnFV. Compound interest or interest on interest is calculated with the compound interest formula. The formula for determining the present value of a single dollar amount when using the present value interest factor is.
As with all Excel formulas instead of typing the numbers directly into the present value formula you can use references to cells containing values.
Therefore the present value formula in cell B4 of the above spreadsheet could be entered as. F P 1 i n 100 1 006 4 100 106 4 100 12625 12625. Compound interest or interest on interest is calculated with the compound interest formula. The first category of six categories that were introduced explains the situation that the present value of money is given and asks you to calculate the future value according to the given interest rate of i per period and n period from now.
