# How do you find the present value of a future income stream?

## How do you find the present value of a future income stream?

The formula for determining the present value of an annuity is PV = dollar amount of an individual annuity payment multiplied by P = PMT * [1 – [ (1 / 1+r)^n] / r] where: P = Present value of your annuity stream. PMT = Dollar amount of each payment. r = Discount or interest rate.

## How do you calculate present value of future value?

Key Takeaways

1. The present value formula is PV = FV/(1 + i) n where PV = present value, FV = future value, i = decimalized interest rate, and n = number of periods.
2. The future value formula is FV = PV× (1 + i) n.

How does PV formula work in Excel?

The built-in function PV can easily calculate the present value with the given information. Enter “Present Value” into cell A4, and then enter the PV formula in B4, =PV(rate, nper, pmt, [fv], [type], which, in our example, is “=PV(B2,B1,0,B3).” Since there are no intervening payments, 0 is used for the “PMT” argument.

What is the present value PV of \$50000 received twenty years from now assuming the interest rate is 6% per year?

What is the present value (PV) of \$50,000 received twenty years from now, assuming the interest rate is 6% per year? C) Calculate the PV with FV = \$50,000, interest = 6%, and N = 20, which = \$15,590.24.

### What’s the present value of a \$900 annuity payment over five years if interest rates are 8 percent?

The present value of a \$900 annuity payment over five years if interest rates are 8 percent is \$3600.

### What is the future value of \$10000 on deposit for 5 years at 6% compound interest?

\$ 13,000
The future value of \$10,000 with 6 % interest after 5 years at simple interest will be \$ 13,000.

What is a present value calculator?

This present value calculator can be used to calculate the present value of a certain amount of money in the future or periodical annuity payments. Present Value, or PV, is defined as the value in the present of a sum of money, in contrast to a different value it will have in the future due to it being invested and compound at a certain rate.

What is the future value of a present value (PV) sum?

The future value (FV) of a present value (PV) sum that accumulates interest at rate i over a single period of time is the present value plus the interest earned on that sum. The mathematical equation is.

#### How do you calculate the future value of interest?

The future value (FV) of a present value (PV) sum that accumulates interest at rate i over a single period of time is the present value plus the interest earned on that sum. For each period into the future the accumulated value increases by an additional factor (1 + i).

#### How do you calculate the present value of a PVIF?

• Multiply any FV by PVIF to get a present value using the same length of investment at the same interest rate. The default calculation above asks what is the present value of a future value amount of \$15,000 invested for 3.5 years, compounded monthly at an annual interest rate of 5.25%.