sLa37677_ch12_295-315 6/29/07 7:40 PM Page 305

Learning Unit 12–2 305

TABLE 12.3 Present value of $1 at end period

Period 1% 112% 2% 3% 4% 5% 6% 7% 8% 9% 10%

1 .9901 .9852 .9804 .9709 .9615 .9524 .9434 .9346 .9259 .9174 .9091
2 .9803 .9707 .9612 .9426 .9246 .9070 .8900 .8734 .8573 .8417 .8264
3 .9706 .9563 .9423 .9151 .8890 .8638 .8396 .8163 .7938 .7722 .7513
4 .9610 .9422 .9238 .8885 .8548 .8227 .7921 .7629 .7350 .7084 .6830
5 .9515 .9283 .9057 .8626 .8219 .7835 .7473 .7130 .6806 .6499 .6209
6 .9420 .9145 .8880 .8375 .7903 .7462 .7050 .6663 .6302 .5963 .5645
7 .9327 .9010 .8706 .8131 .7599 .7107 .6651 .6227 .5835 .5470 .5132
8 .9235 .8877 .8535 .7894 .7307 .6768 .6274 .5820 .5403 .5019 .4665
9 .9143 .8746 .8368 .7664 .7026 .6446 .5919 .5439 .5002 .4604 .4241
10 .9053 .8617 .8203 .7441 .6756 .6139 .5584 .5083 .4632 .4224 .3855
11 .8963 .8489 .8043 .7224 .6496 .5847 .5268 .4751 .4289 .3875 .3505
12 .8874 .8364 .7885 .7014 .6246 .5568 .4970 .4440 .3971 .3555 .3186
13 .8787 .8240 .7730 .6810 .6006 .5303 .4688 .4150 .3677 .3262 .2897
14 .8700 .8119 .7579 .6611 .5775 .5051 .4423 .3878 .3405 .2992 .2633
15 .8613 .7999 .7430 .6419 .5553 .4810 .4173 .3624 .3152 .2745 .2394
16 .8528 .7880 .7284 .6232 .5339 .4581 .3936 .3387 .2919 .2519 .2176
17 .8444 .7764 .7142 .6050 .5134 .4363 .3714 .3166 .2703 .2311 .1978
18 .8360 .7649 .7002 .5874 .4936 .4155 .3503 .2959 .2502 .2120 .1799
19 .8277 .7536 .6864 .5703 .4746 .3957 .3305 .2765 .2317 .1945 .1635
20 .8195 .7425 .6730 .5537 .4564 .3769 .3118 .2584 .2145 .1784 .1486
21 .8114 .7315 .6598 .5375 .4388 .3589 .2942 .2415 .1987 .1637 .1351
22 .8034 .7207 .6468 .5219 .4220 .3418 .2775 .2257 .1839 .1502 .1228
23 .7954 .7100 .6342 .5067 .4057 .3256 .2618 .2109 .1703 .1378 .1117
24 .7876 .6995 .6217 .4919 .3901 .3101 .2470 .1971 .1577 .1264 .1015
25 .7798 .6892 .6095 .4776 .3751 .2953 .2330 .1842 .1460 .1160 .0923
26 .7720 .6790 .5976 .4637 .3607 .2812 .2198 .1722 .1352 .1064 .0839
27 .7644 .6690 .5859 .4502 .3468 .2678 .2074 .1609 .1252 .0976 .0763
28 .7568 .6591 .5744 .4371 .3335 .2551 .1956 .1504 .1159 .0895 .0693
29 .7493 .6494 .5631 .4243 .3207 .2429 .1846 .1406 .1073 .0822 .0630
30 .7419 .6398 .5521 .4120 .3083 .2314 .1741 .1314 .0994 .0754 .0573
35 .7059 .5939 .5000 .3554 .2534 .1813 .1301 .0937 .0676 .0490 .0356
40 .6717 .5513 .4529 .3066 .2083 .1420 .0972 .0668 .0460 .0318 .0221
Note: For more detailed tables, see your booklet, the Business Math Handbook.

Comparing Compound Interest (FV) Table 12.1 with Present

Value (PV) Table 12.3
We know from our calculations that Bill needs to invest $80 for 4 years at 8% compound
interest annually to buy his bike. We can check this by going back to Table 12.1 and com-
paring it with Table 12.3. Let’ s do this now .

Compound value Table 12.1 Present value Table 12.3

Present Future Future Present

Table 12.1 value value Table 12.3 value value
1.3605  $80.00  $108.84 .7350  $108.84  $80.00

(4 per., 8%) (4 per., 8%)

We know the present dollar amount We know the future dollar amount
and find what the dollar amount is and find what the dollar amount is
worth in the future. worth in the present.