Money today versus money later.
A riyal today is worth more than a riyal next year, because today's riyal can earn interest in the meantime. Pick what to solve for and fill in the rest.
Paid each time interest is added.
Present value
SAR 48,978
- Paid in
- SAR 48,978
- Interest earned
- SAR 11,022
- Effective annual rate
- 7.00%
- Balance
- Paid in
Move along the chart, or use the arrow keys, to read each year.
How it works
The same sum with your numbers, step by step.
Rate per period: the annual rate divided by the times a year interest is added
i = 7% ÷ 1 = 0.07
Number of periods
n = 3 × 1 = 3
Growth factor
1.07³ = 1.225043
Present value: take off the grown payments, then discount
60,000.00 ÷ 1.225043 = SAR 48,977.87
Where this appears in the CME
Present value, future value and discounting are in CME-4A, chapter 5 (Economics and investment analysis). A typical question: at 7% a year, is SAR 60,000 in three years worth more than SAR 50,000 today?
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