If either n or i is to be solved for, proceed to Step 5. Use n and i to choose the proper interest factor from the interest table indicated in Step 1. 3. Solve for the missing quantity by performing the computation indicated in Step 1. 4. Then find n or i by referring to the proper interest table to locate the factor in the appropriate column or row. Interpolation may be necessary.
Present value is always a smaller quantity than the future amount.
The process of finding the future amount is called accumulation. The process of finding the present value is called discounting. Ordinary annuities Present value of an ordinary annuity is always smaller than the future amount of a similar annuity. In annuity problems, the rents, interest payments, and number of periods must all be stated on the same basis. The present value of an annuity due is always smaller than the future amount of a similar annuity due.