finding present value and compound interest

Question

$900 compound amount, 1 3/4 terms of investment, 18% nominal rate, interest compounded monthly.

Answer 1

If I'm reading your question correctly, you have $900 and the end of 1.75 years or 21 months at a rate of 18% compounded monthly and are looking for the present value. To do this you want to discount the 900 based on the time period and interest rate using this equation:

 

Present Value = Future Value/(1+r/n)^T

 

N is the amount of periods per year in this case 12

T is the amount of periods total or 21

R is the interest rate of 18% (by the way unless you're in Venezuela or some other hyper inflationary country this is unrealistically high)

And of course our future value is $900

 

900(1+(.18/12)²¹ = $658.37

 

That is our present value.