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Financial Maths Question about P/a(i,n)?
i know P/a(i,n) is used to calculate the present value of future money. i also know that the formula could be used to predict the price of a bond by the hand of the market interest rate.
that's done like so:
P = C / (1+i)^n + A * ((1+i)^n-1)/(1+i)^n
usually C, A i and n are given. what does the formula look like when A C P and n are given.
(rephrase it to i = ...)
1 Answer
- ?Lv 510 years agoFavorite Answer
I don't really understand your equations, however, for a simply one like the Future value of a Present amount:
F = P (1+i)^n
You would solve for i by using logarithims:
ln (F/P) = n ln (1 + i)
So you need a calculator, find ln (F/P), divide by n, take the anti-ln, then subtract 1 to find i
