Present Value of a Lump Sum with more than 1 compounding period per year
Sometimes, certain institutions pay out interest more than once each year. It is possible the interests are paid out
Semi Annualy
Quarterly
Monthly
Daily
Continuously
Basically, we will need to discount the compound interests we have earned over the two years taking into account that interests are paid out more than once in a year to derive the Present Value.
Formula of Present Value of a Lump Sum with more than 1 compounding period per year
PV = FVn * (1+(r/m))^(-(m*n))
FVn is the Future Value after a specific period
PV is Present Value
r is the interest rate
n is the period. For example 5 years.
m is the compounding period
You may want to bring up the Present Value.xls spreadsheet and refer to the Worksheet Present Value (m CompoundPeriod).