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Time Value of Money Table:Present Value of Lump-Sum

Brian Krogol
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Alright, so here we go. This is the first of our two tables and this is for finding the present value of $1. When they say the present value of $1 this is the table for lump sums. Okay. The table for lump sum payments. So remember we're looking for the present value factor and all these numbers in here. These are the present value factors all listed throughout. I think I missed when I was circling all these different numbers. These are the present value factors. So it's all about being able to pick out which is the correct number. And notice as we go down the table down this way we've got different ends. Remember we had those variables N for number of periods and are for interest rates. Well this this way going this way left to right. Those are our interest rates are right. So we've got the number of periods going down and the interest rate going to left to right. So what we're gonna do is we're gonna analyze our problem and we're gonna find out what our interest rate is, what our number of periods is. And then we'll go to the table say that we find out that there's 10 periods and the interest rate is 7%. So we would go to 10 periods and 7% let me do it in a different color 10 periods and 7%. And we would go in our table and we would find what that present value factor is. So then we would use our formula which is take the future value. Say we wanted to know what $1000.10 years from now is worth at an interest rate of 7%. Well we would take that $1000 and multiply it by this present value factor in the table. $1000 times 10000.508 will tell us what $1000.10 years from now is worth at a rate of 7%. Okay, so that's how we're gonna read this table. The important factors that we need. Our our number of periods and our interest rate. Okay. Those are the key to being able to read this table. Alright, let's pause and let's move on to the next table.