How to Calculate and Solve for Present Worth | Equal Payment Series | Economic Equivalence

The image above represent present worth. To calculate present worth, three essential parameters are needed and these parameters are Annual Amount or Worth (A), Interest Rate (i) and Number of Years (N).

The formula for calculating present worth:

P = A[((1 + i)^N) – 1] / [i((1 + i)^N)]

Where:

P = Present Worth or Amount
A = Annual Worth or Amount
i = Interest Rate
N = Number of Years

Let’s solve an example;
Given that the annual worth is 29, the interest rate is 0.2 and the number of years is 10. Find the present worth?

This implies that;

A = Annual Worth or Amount = 29
i = Interest Rate = 0.2
N = Number of Years = 10

P = A[((1 + i)^N) – 1] / [i((1 + i)^N)]
P = 29[((1 + 0.2)¹⁰) – 1] / [0.2((1 + 0.2)¹⁰)]
That is, P = 29[((1.2)¹⁰) – 1] / [0.2((1.2)¹⁰)]
P = 29[6.191 – 1] / [0.2 x 6.191]
P = 29[5.191] / [1.238]
Then, P = 29 x 4.19
P = 121.58

Therefore, the present worth is ₦121.58.

Read more: How to Calculate and Solve for Future Worth | Equal Payment Series | Economic Equivalence

How to Calculate Present Worth | Equal Payment Series Using Nickzom Calculator

Nickzom Calculator – The Calculator Encyclopedia is capable of calculating the present worth.

To get the answer and workings of the present worth using the Nickzom Calculator – The Calculator Encyclopedia. First, you need to obtain the app.

You can get this app via any of these means:

Web – https://www.nickzom.org/calculator-plus

To get access to the professional version via web, you need to register and subscribe for NGN 1,500 per annum to have utter access to all functionalities.
You can also try the demo version via https://www.nickzom.org/calculator

Android (Paid) – https://play.google.com/store/apps/details?id=org.nickzom.nickzomcalculator
Android (Free) – https://play.google.com/store/apps/details?id=com.nickzom.nickzomcalculator
Apple (Paid) – https://itunes.apple.com/us/app/nickzom-calculator/id1331162702?mt=8
Once, you have obtained the calculator encyclopedia app, proceed to the Calculator Map, then click on Economics under Engineering.

Now, Click on Economic Equivalence under Economics

Now, Click on Present Worth under Economic Equivalence

The screenshot below displays the page or activity to enter your values, to get the answer for the present worth according to the respective parameters which are the Annual Amount or Worth (A), Interest Rate (i) and Number of Years (N).

Now, enter the values appropriately and accordingly for the parameters as required by the Annual Amount or Worth (A) is 29, Interest Rate (i) is 0.2 and Number of Years (N) is 10.

Finally, Click on Calculate

As you can see from the screenshot above, Nickzom Calculator– The Calculator Encyclopedia solves for the present worth and presents the formula, workings and steps too.