Future Value of an Investment From Today
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If we look at the formula to calculate the dollar amount of a $1 we put into savings today, we see that it is fv = pv*((1+i)^n). The variables are fv = future value, pv = present value, i = interest rate per period, and n = number of periods. In the formula, n is an exponent.
What does the exponent in this case tell us we need to do mathematically to the (1 + i) segment of the formula?
Select an interest rate (i) and number of periods (n). How much money would you have at the end if you invested $1 today (pv)?
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If we look at the formula to calculate the dollar amount of a $1 we put into savings today, we see that it is fv = pv*((1+i)^n). The variables are fv = future value, pv = present value, i = interest rate per period, and n = number of periods. ...
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- BE, Bangalore University, India
- MS, University of Wisconsin-Madison
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