Final answer:
The present value of an investment can be calculated using the formula: PV = F / (1 + i)^n.
Step-by-step explanation:
The present value of an investment can be calculated using the formula:
PV = F / (1 + i)^n
In this formula, PV represents the present value, F represents the future value, i represents the effective interest rate, and n represents the number of years.
For example, let's say you have an investment
that will be worth $10,000 in 5 years with an effective interest rate of 8%. To find the present value of the investment, you would use the formula:
PV = $10,000 / (1 + 0.08)^5
Simplifying the formula would give you the present value of the investment.