Year 1 Year 2 Year 3 Future Value: $8,000 Present Value: The most straightforward method for calculating the present value of a future amount is to use the Present Value Table. By multiplying the future amount by the appropriate figure from the table, one may adequately determine the present value. Instructions for using present value tables + Present Value of a Future Amount Table1 - Present Value of $1 at Compound Interest Period 5% 6% 7% 8% 9% 10% 11% 12% 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 1 2 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 3 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.536 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 6 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 7 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 B 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 9 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 10 11 0.585 0.527 0.475 0,429 0.388 0.350 0.614 0.558 0.50 0.463 0.422 0.386 0.352 0.322 0.317 0.287 12 13 0.557 0.497 0.444 0.397 0.530 0.469 0.415 0.368 0.356 0.319 0.286 0.257 0.326 0.290 0.258 0.229 14 15 0.505 0.442 0.388 0.340 0.481 0.417 0.362 0.315 0.299 0.263 0.232 0.205 0.275 0.239 0.209 0.183 16 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 17 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 18 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 19 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 20 0.377 0.312 0.258 0.215 0.178 0.149 0.124 0.104 Using the previous table, enter the correct factor for three periods at 5%: Future value x Factor -Present value $8,000 x 0.864. $6,912 You may want to own a home one day. If you are 20 years old and plan on buying a $800,000 house when you turn 30, how much will you have to invest today, assuming your investment yields an 8% annual return? $370,552 x