Present value. The Present Value (VA) is the value that has a certain flow of money that we will receive in the future. The Present Value is a formula that allows us to calculate what is the value of today that has an amount of money that we will not receive right now but later, in the future.
VA = VF / (1 + k) ^ n
VF.- Future value
VA.- Present or current value
k.- Interest rate
n.- term of time-
Substituting the values:
VA = VF / (1 + k) ^ n
VA = (5000000) / (1 + ((20/100) * (1/15))) ^ 15
VA = 4099067.51 Rp
Answer:
The amount of initial savings is:
VA = 4099067.51 Rp
