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    Interest : Present Value and Future Value

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    The future value of an amount of money is said to be the value of the amount of money that
    is allowed at an interest rate over time, and is given by the formula:
    FV = PV(1 + i)n
    FV = future value
    PV = present value
    i = the interest rate
    n = the number of years (periods)

    Find the present value that will have produced $15,000 ten years from now if that present value will earn 10% annual interest (commonly referred to as the discount rate) for the next ten years.
    FV = PV(1 + i)n
    PV = FV(1 + i)n
    PV = ??

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    Solution Summary

    Present value is calculated in this solution.