Question

N=39; i = 0.039; PMT = $196; PV =?

Answer 1

Given the Present Value (PV) formula

`PV=PMT*(1-((1)/((1+i)^n)))/(i)`

Write out the parameters

`\begin{gathered} PV=\text{?} \\ n=39 \\ i=0.039 \\ \text{PMT=\$196} \end{gathered}`

Substitute the following values in the present value formula to find the PV

`PV=196*(1-((1)/((1+0.039)^(39))))/(0.039)`
`PV=196*(1-0.2249021697)/(0.039)`
`PV=196*(0.7750978303)/(0.039)`
`\begin{gathered} PV=196*19.87430334 \\ PV\approx3895.36 \end{gathered}`

Hence, the Present Value (PV) is approximately $3895.36