Which formula is used to calculate the present value of a series of payments?

The formula used to calculate the present value of a series of payments is indeed represented by the choice indicating that P, the present value, is calculated with respect to a series of future payments A. The equation illustrates how the present value is derived from a stream of equal payments occurring at regular intervals.

In this formula, A represents the amount of each payment, i symbolizes the interest rate per period, and n denotes the total number of payments. The expression adjusts the series of future payments back to their equivalent value today, reflecting how much those payments are worth in present terms when accounting for the time value of money.

The numerator, which is (1 + i)^n - 1, accounts for the accumulation of payments over time due to interest, while the denominator adjusts for the effective growth of money over that same period. This formula is particularly useful in financial contexts, such as loan amortization or investment analysis, where cash flows occur at regular intervals. Understanding this relationship is crucial for effective financial planning and decision-making.

The other formulas listed serve different purposes in financial mathematics. For instance, the one dealing with F, which represents future value, is used to calculate how much a present sum will grow over time with interest but does not serve