# What will happen to this formula if i=0?

I was thinking what would be present worth if there was no interest. but, it turned out t to be infinite, which i find funny.

am i right?

### 3 Answers

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- SpacemanLv 71 month ago
First, this question should have been placed in the Business & Finance category,

not Astronomy & Space.

A = principal amount = $10,000

n = number of payment periods = 48

i = interest rate per period = 0% = 0.0

P = present worth = to be determined

P = A{[(1 + i)^n - 1] / [i(1 + i)^n]}

P = $10,000{[(1 + 0)^48 - 1] / [0(1 + 0)^48]}

In the formula that you have quoted, P does go to infinity if i = 0.

This is because the variable I is in the denomonator and as I goes

to zero, then P becomes bigger and bigger until it approaches

infinity. Are you sure that this formula is correct?

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