The image above represents present worth.

To compute for present worth, three essential parameters are needed and these parameters are **Gradient Amount (G), Interest Rate (i) **and **Number of Years (N).**

The formula for calculating present worth:

P = G[((1 + i)^{N}) – iN – 1] / [i²((1 + i)^{N})]

Where:

G = Gradient Amount

P = Present Amount or Worth

i = Interest Rate

N – Number of Years

Let’s solve an example;

Find the present worth when the gradient amount is 22, the interest rate is 0.2 and the number of years is 2.

This implies that;

G = Gradient Amount = 22

i = Interest Rate = 0.2

N – Number of Years = 2

P = G[((1 + i)^{N}) – iN – 1] / [i²((1 + i)^{N})]

P = 22[((1 + 0.2)^{2}) – 0.2(2) – 1] / [0.2²((1 + 0.2)^{2})]

P = 22[((1.2)^{2}) – 0.4 – 1] / [0.0400000000000001((1.2)^{2})]

P = 22[1.44 – 0.4 – 1] / [0.04000000000000001 x 1.44]

P = 22[0.040000000000000036] / [0.05760000000000001]

P = 22 x 0.6944444444444449

P = 15.27

Therefore, the **present worth **is **₦15.27.**