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

July 25, 2020March 31, 2024 Loveth Idoko

Last Updated on March 31, 2024

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

The formula for calculating present worth:

P = F / (1 + i)^N

Where:

P = Present Worth or Amount
F = Future Worth or Compound Amount
i = Interest Rate
N = Number of Years

Let’s solve an example;
Find the present worht when the future amount or worth is 24, the interest rate is 0.06 and the number of years is 11.

This implies that;

F = Future Worth or Compound Amount = 24
i = Interest Rate = 0.06
N = Number of Years = 11

P = F / (1 + i)^N
P = 24 / (1 + 0.06)¹¹
That is, P = 24 / (1.06)¹¹
P = 24 / 1.89
P = 12.64

Therefore, the present worth is ₦12.64.

Calculating the Future Amount or Worth when the Present Worth, the Interest Rate and the Number of Years are Given

F = P x (1 + i)^N

Where;

F = Future Worth or Amount
P = Present Worth or Amount
i = Interest Rate
N = Number of Years

Let’s solve an example;
Find the future amount or worth when the present worth is 30, the interest rate is 0.06 and the number of years is 10.

This implies that;

P = Present Worth or Amount = 30
i = Interest Rate = 0.06
N = Number of Years = 10

F = P x (1 + i)^N
F = 30 x (1 + 0.06)¹⁰
That is, F = 30 x (1.06)¹⁰
F = 30 x 1.79
F =53.7

Therefore, the future worth is 53.7.

How to Calculate Present Worth | Simple Payment 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 Future Amount or Worth (F), Interest Rate (i) and Number of Years (N).

Now, enter the values appropriately and accordingly for the parameters as required by the Future Amount or Worth (F) is 24, Interest Rate (i) is 0.06 and Number of Years (N) is 11.

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.