Consider a future value of $$1,000,7$ years in the future. Assume that the nominal interest rate is $9\mathrm{.}00\%.$

If you are calculating the present value of this cash flow under semiannual $($twice per year$)$ compounding, you would enter

for $N$ and

for

$\frac{\text{I}}{Y}$ into your financial calculator.

Entering in the values you just calculated for $N$ and $\frac{\text{I}}{Y},$ along with a PMT $=0$ and a $FV=$$$1,000,$ into a financial calculator yields a present value of

approximately $

with semiannual compounding.

If you are calculating the present value of this cash flow under quarterly $($four times per year$)$ compounding, you would enter

for $N$ and

for $\frac{\text{I}}{Y}$ into your financial calculator.

Entering in the values you just calculated for $N$ and $\frac{\text{I}}{Y},$ along with a PMT$=0$ and a $FV=$$$1,000,$ into a financial calculator yields a present value of

approximately $

with quarterly compounding.

Suppose now that the cash flow of $$1,000$ only $1$ year in the future.

If you are calculating the present value of this cash flow under quarterly $(12$ times per year$)$ compounding, you would enter

for $N$ and

for $\frac{\text{I}}{Y}$ into your financial calculator.

Entering in the values you just calculated for $N$ and $\frac{\text{I}}{Y},$ along with a PMT$=0$ and a $FV=$$$1,000,$ into a financial calculator yields a present value of

approximately $

with monthly compounding.