# Interest Discounting, Example 5

1. says

Hi John,

I am having difficulties with final example, I am not quite sure where I am going wrong

1’500 x 1 =
(1.064)2

Thanks,

Marcus

• says

If you look at the lecture again, you will see that I am multiplying 1,500 by the discount factor. The discount factor is 1/(1.064^2)

0.064 because the rate of interest is 6.4%. To the power 2 because we are discounting for 2 years.

• says

Hi John,

Thank you for explaining – I had a break and got back to it and it makes sense now

Thanks,

Marcus

2. says

iam having a problem i need to know when to used annunity from when to use presen value when given a question

• says

You use the annuity factors when you have an equal cash flow each year.

When the cash flows are different each year, then you use the ordinary present value tables.

3. says

In the example for min 16:43, shouldn’t t the discount factor be 0.756 as per the table?

• says

oh yes, sorry i looked in the wrong place.

thanks

4. says

How to calculate
x * (1.10)4
x =- 800 /(1.1)4
546.41 now.
I getting difficulty to count it calculator .Please explain

• says

@chandhini, OT definitely is a BOON.. Great job Mr.Muffat! You’ve made my life a lot easier! Kudos!