00:01
The present value of a single sum problem.
00:03
So let's write down our variables to start.
00:06
We've got present value, future value, interest rate, and number of periods.
00:15
We're trying to find the present value, so that's what we don't know.
00:18
The future value is this 1650, and the interest rate or the discount rate is 8%.
00:30
And we're told that we're looking at six years.
00:34
So the formula for this is that the present value equals the future value times present value function, basically.
00:50
And i'll break out that function, but you can also find your answer to this piece in a chart on, in your textbook.
00:58
You just need to look at the chart for present value of a single sum.
01:04
So let's write it out though.
01:05
Present value equals future value times 1 over 1 plus i to the n.
01:20
So when we add in the numbers that we have, we've got present value equals 1650 times 1 over 1 plus 0 .08, just the 6th...