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

  • Rick
    Lv 5
    9 years ago
    Favorite 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

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