Course Name: Python for Trading: Basic, Section No: 3, Unit No: 3, Unit type: Quiz
I tried to solve the quiz using the formula 1000(1-5%)^5 but got 773,78 instead. What was the mistake?
Hi Andreas,
In the previous quiz unit (Section3, Unit 2), you calculated the Future Value of an investment using the formula mentioned below:
FV = PV * ( 1 + r )^n
Now, let's modify the same formula so that you can calculate the Present Value.
You can simply move the term [ ( 1 + r )^n ] from the RHS to LHS.
Here's what the formula would look like.
PV = FV / [ ( 1 + r )^n ]
Substituting the values in this formula, you get.
PV = 1000 / [ ( 1 + 0.05 )^5 ]
Try solving this equation further and you will find the correct answer.
Hope this was helpful.