The required amount to buy a new car is $22,000 and the amount to be saved for 3 years at an opportunity cost rate 12% compounded monthly. Present value is the current value of future investment or series of future payments at a predetermined interest rate for a specified period. P V = F V ( 1 + r m ) n × m Here, The present value is “ PV ”. The future value is “ FV ”. The interest rate is “ r ”. The maturity period of time period is “ n ”. The no of compounding is “ m ”.

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Chapter 4, Problem 8PROB

Summary Introduction

The required amount to buy a new car is $22,000 and the amount to be saved for 3 years at an opportunity cost rate 12% compounded monthly.

Present value is the current value of future investment or series of future payments at a predetermined interest rate for a specified period.

PV=FV(1+rm)n×m

Here,

The present value is “PV”.

The future value is “FV”.

The interest rate is “r”.

The maturity period of time period is “n”.

The no of compounding is “m”.

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