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Find the present value of saving AED 10,000 per month at 6 percent for four years.

Question:

Find the present value of saving AED 10,000 per month at 6 percent for four years.

Present value

Present value (PV) of an investment is spot value of future amount or sequence of cash flows of the investment. It is calculated by dividing all the expected future cash flows by discounting rate, it means having higher discounting rate will lower the present value of the investment.

Answer and Explanation: 1

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Amount saved every month (A) = AED10,000

Discount rate (r) = 6%

Time period (t) = 4

Number of compounding (n) = 12

{eq}\begin{align*} PV &=...

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How to Calculate the Present Value of an Annuity

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Chapter 8 / Lesson 3
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Learn how to find present value of annuity using the formula and see its derivation. Study its examples and see a difference between Ordinary Annuity and Annuity Due.


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