# Evaluate financial expression using PEMDAS

by Andrea
(Otis, CO., U.S.)

using PEMDAS to evaluate financial arithmetic

How do I simplify the financial expression shown below to get this answer: 0.822?

500(1/(1+0.04)⁵)

### Comments for Evaluate financial expression using PEMDAS

 Jan 24, 2013 simplify expression by: Staff AnswerPart IThe arithmetic expression 500(1/(1+0.04)⁵) is a calculation of the present value of a future cash payment of \$500.(The problem statement does not say what the monetary unit is. I’m arbitrarily using the monetary unit of dollars.)The general formula is:` FV PV = -------- (1 + i)t FV = future value = \$500PV = present value = the result of the calculationi = interest rate for one time period = .04 (The interest rate is 4%. 4% ÷ 100 = 0.04)t = the number of time periods = 5(5 time periods could represent 5 years, 5 months, or some other time period. The problem statement does not say.)` A summary of the calculation for your problem is:` FV PV = -------- (1 + i)t 1 PV = FV * ------- (1 + i)t 1 PV = 500 * ---------- (1 + .04)5 1 ---------- = 0.8219271067594 (1 + .04)5 this is the 0.822 you asked about in the problem statement PV = 500 * 0.8219271067594 PV = 410.9635533797 ` -------------------------------------