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Present value
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Learn it Present value is how much to invest today to reach a future amount: PV = FV(1 + i)⁻ⁿ.
Example: How much must be invested now at 5% per year, compounded annually, to have $10 000 in 6 years?
- PV = 10 000(1.05)⁻⁶.
- ≈ $7462.15.
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