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Calculating present value factors for different cases

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Use the basic formula for present value, along with the given opportunity cost, i, and the number of periods, n, to calculate the present value interest factor in each of the cases shown. Compare the calculated value to the table value.

Case-- Opportunity Cost,i-- # of periods, n--
A-- 2%-- 4--
B-- 10%-- 2--
C-- 5%-- 3--
D-- 13%-- 2--

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Solution Summary

The solution explains the steps for calculating present value factors by using basic formula. Calculated factors are compared with tabulated factors.

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Please refer attached solution for better clarity of tables.

Solution:

PV = FV/(1+i/100)^n
PV/FV = Present Value Factor = 1/(1+i)^n
i=opportunity cost n = number of ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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