Definition:Compound Interest Table/Annuity Present Value
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Definition
Let a principal $P$ be invested every conversion period, and accumulated under compound interest with an interest rate $r$ over a number of conversion periods $n$.
The present value of $P$ is defined as:
- $\dfrac {1 - \paren {1 + r}^{-n} } r$
That is, it is the amount necessary to provide $1$ unit payment at the end of $n$ conversion periods.
Also see
- Results about annuity present values can be found here.
Sources
- 1998: David Nelson: The Penguin Dictionary of Mathematics (2nd ed.) ... (previous) ... (next): interest
- 2008: David Nelson: The Penguin Dictionary of Mathematics (4th ed.) ... (previous) ... (next): interest