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Finance[presentvalue] - present value of an amount
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Calling Sequence
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presentvalue(amount, rate, nperiods)
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Parameters
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amount
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given amount
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rate
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interest rate
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nperiods
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number of periods
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Description
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The function presentvalue() gives the value at period=0 of an ``amount'' given at period=``nperiods''. The interest rate is given by ``rate''.
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The present value concept is arguably the most important concept behind the ``Finance'' package. It allows one to properly account for the time value of money.
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The Finance[presentvalue] is the appropriate function to calculate the present value of a pure discount bond (zero-level bond).
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The command with(Finance,presentvalue) allows the use of the abbreviated form of this command.
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Since presentvalue used to be part of the (now deprecated) finance package, for compatibility with older worksheets, this command can also be called using finance[presentvalue]. However, it is recommended that you use the superseding package name, Finance, instead: Finance[presentvalue].
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Compatibility
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The Finance[presentvalue] command was introduced in Maple 15.
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Examples
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I will require 100 U in three years. I will receive 12% per year at the bank. How much should I deposit now so that I obtain the appropriate amount in 3 years?
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This can be calculated as:
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Now suppose that the interest is compounded monthly. The calculation proceeds as follows:
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The effect of the compounding over shorter periods is easily seen.
I have been offered a zero-level bond paying 1000 U in 5 years for 800 U. The risk of default is nil. Should I buy the bond if the interest rate is 10%?
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Answer: it is definitely not a good deal. The bond would be yielding
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about 4.6 %
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