That's right - which is why I don't think the posts have been
correct in calling the deal as presented a 10% rate of return to the
investor.
--- In AsburyPark@yahoogroups.com, "dfsavgny" <[EMAIL PROTECTED]> wrote:
>
> --- In AsburyPark@yahoogroups.com, "justifiedright"
> <justifiedright@> wrote:
> >
> > So if I put 8.3 million in a safe investment vehicle with 5%
> > compounded annually, how much would I have at the end of 10
years?
> >
>
> $ amount X (1 + i)^n
>
> i = rate of interest
> n = compounding periods
>
> Let's you find the compound interest factor
>
> The answer using your numbers
>
> $8.3M X (1 +5%)^10
> $8.3M X 1.628895
>
> $13.519825M
>
> Go in reverse. What is the present value of $13.519825 to be
received
> in 10 years assuming a 5% interest rate.
>
> Present value factor is reciprocal 1/(1+i)^n
>
> $13.519825M X 1/(1+5%)^10
> $13.519825M X .613913 = $8.3M
>
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