Please show formula c-How much must one invest now (PV) to have $20,000 3 years

Question

Please show formula

c-How much must one invest now (PV) to have $20,000 3 years from now, assuming one could earn 12% per year d. What is the present value of $20,000 received 3 years from now, assuming one could earn 12% per year e. What is the present value of $20,000 received at the end of each of the next two years, assuming an interest rate of 12% f. What is the present value of $20,000 received at the end of each the next three years plus $100,000 received at the end of the third year. Assume an interest rate of 12%. A= $119,215 FV / (1+i)^n = PV FV 20,000 20,000 20,000 100,000 Periods of int 1.120 1.254 1405 1405 PV 17,857 15,944 14,236 71,178 19

Explanation / Answer

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

1.

20,000=P(1.12)^3

Hence P=$20,000/1.12^3

=$14235.60(Approx)

2.

20,000=P(1.12)^3

Hence P=$20,000/1.12^3

=$14235.60(Approx)

3.

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=20000/1.12+20000/1.12^2

=$33801.02(Approx).

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