# Formula for Present Value and Sample Calculation

The concept of present value gives the equivalent in dollars available immediately to a payment that is made at some point in the future.

What amount of money today is equivalent to $1,100 one year from now, if banks are paying an interest rate i = 10% per year? In other words, what is the present value of $1,100 received one year from now, when interest rates are 10%? Show all calculations.

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#### Solution Summary

This solution gives the formula for the present value of a future payment, and gives a sample calculation showing all work.

$2.19