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Using Simple interest , What is Discount Formula ?
Discount = Future value x Interest rate x Time
A note has face value BD 3000 at compound interest rate 6% annually is converted to cash before 5 years. Find the present value
PV = Fv x ( 1 + i ) -n = 3000 x ( 1+ 6% ) -5 =BD 2241.775
Future value is BD 3000 , Present value is D 2241.775 , How much is the discount ? ( Compound interest )
BD 758.225
What is the other name of Future value ?
Face value
A note has face value BD 2500 at compound interest rate 5% annually is converted to cash before 7 years. Find the present value
BD 1776.7
if compounded semi annually , what will happen to n & i ?
i/2 , n x 2
A note has face value BD 2500 at compound interest rate 5% annually is converted to cash before 7 years. and the present value is BD 1776.7,What is discount ?
2500-1776.7 = 723.29
By using Compound interest formula , How to get the Discount ?
Discount = Future value - Present Value
By using compound interest formula , How to get the Present value?
Future value x (1+ Interest rate ) ^ – number of period/Time
PV = FV x ( 1 + i ) ^- n is the formula of ..
Compound interest
3000 x ( 1+ 6% ) ^ -5 =BD 2241.775 , What type of interest is here?
Compound interest
What is Discount
Reduction / Deduction on the future value.
What is Present value ?
The value is due now before the due date ( the value will pay before due date).
What is Future value ?
The value due at the end of invested period (the value of loan at the commercial paper).
Using simple interest , What is Present value formula ?
Present value = Future value – discount
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