Home > Algebra calculators > Present value using Compound Interest example

6. Present value using Compound Interest example ( Enter your problem )
  1. Find Future value (FV) Example
  2. Find Present value (C) Example
  3. Find Interest Rate (i) Example
  4. Find Time (n) Example
Other related methods
  1. Future value using Simple Interest
  2. Future value using Compound Interest
  3. Future value of Annuity
  4. Future value of Annuity Due
  5. Present value using Simple Interest
  6. Present value using Compound Interest
  7. Present value of Annuity
  8. Present value of Annuity Due
  9. Contineous Compounding

2. Find Present value (C) Example
(Previous example)
4. Find Time (n) Example
(Next example)

3. Find Interest Rate (i) Example





1. Find Interest Rate i = ?
Present value C = 5000, Time n = 2 Year, Future value FV = 6050,
Interest compounded = Year (1/year)
for Present value using Compound Interest method


Solution:
`C=5000`

`n=2` years (Number of periods)

`FV=6050` (Future value)

Now, Future value (Compound Interest) formula is
`FV=C*(1+i)^n`

`:.6050=5000*(1+i)^2`

`:.(6050)/(5000)=(1+i)^2`

`:.(1+i)^2=1.21`

`:.(1+i)=1.21^(1/2)`

`:.(1+i)=1.1`

`:.i=1.1-1`

`:.i=0.1`

`:.i=10 %` per year
2. Find Interest Rate i = ?
Present value C = 5000, Time n = 2 Year, Future value FV = 6050,
Interest compounded = Year (1/year)
for Present value using Compound Interest method


Solution:
`C=5000`

`n=2` years (Number of periods)

`FV=6050` (Future value)

Now, Future value (Compound Interest) formula is
`FV=C*(1+i)^n`

`:.6050=5000*(1+i)^2`

`:.(6050)/(5000)=(1+i)^2`

`:.(1+i)^2=1.21`

`:.(1+i)=1.21^(1/2)`

`:.(1+i)=1.1`

`:.i=1.1-1`

`:.i=0.1`

`:.i=10 %` per year


This material is intended as a summary. Use your textbook for detail explanation.
Any bug, improvement, feedback then Submit Here



2. Find Present value (C) Example
(Previous example)
4. Find Time (n) Example
(Next example)





Share this solution or page with your friends.


 
Copyright © 2024. All rights reserved. Terms, Privacy
 
 

.