Re: Financial Problems

*To*: mathgroup at smc.vnet.net*Subject*: [mg5064] Re: [mg5059] Financial Problems*From*: "Paul R. Wellin" <wellin>*Date*: Fri, 25 Oct 1996 22:48:06 -0400*Sender*: owner-wri-mathgroup at wolfram.com

> 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 4-year 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: 217-398-0700 fax: 217-398-0747 email: wellin at wolfram.com