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Re: [mg5059] Financial Problems
Posted:
Oct 25, 1996 10:20 PM


> I have the student version of mathematica and the book"Mathematica by > Example" which shows compoud interest etc. But I don't think any of the > packages has functions for future of present value. Does anyone know > anything about this?
The formula to compute the future value of an investment say, consisting of n equal payments of D dollars, paying an interest rate r per payment interval, is given by:
In[1]:= FutureValue[D_, n_, r_]:= D((1 + r)^n  1)/r
So for example, the value of an annuity after 20 years (or 20*12 = 240 months), in which you invest $100 per month (the investment interval) in an account that pays 10% per year (or 10%/12 = .8333% per month), you get:
In[2]:= FutureValue[100, 20*12 , .10/12]
Out[2]= 75936.9
If your compounding and payments were at some other interval (quarterly say), you would have to adjust accordingly. Or you could do a bit of math to include that into your formula also.
To find the present value of an investment say, consisting of n equal payments of D dollars, paying an interest rate of r per payment interval, you would use:
In[3]:= PresentValue[D_, n_, r_]:= D(1  (1 + r)^n)/r
For example, to figure the monthly payment on a 4year loan of $12,000 paying 12.9% interest rate compounded monthly, you would compute:
In[4]:= Solve[PresentValue[x, 4*12, .129/12] == 12000, x]
Out[4]= {{x > 321.335}}
Hope this helps.
 Paul Wellin Academic and Business Liaison Wolfram Research, Inc. 100 Trade Center Drive Champaign, IL 61820
phone: 2173980700 fax: 2173980747 email: wellin@wolfram.com



