# Math help needed: Future value vs Present value

Anonymous
account_balance_wallet \$5

# Future value vs Present value

What is the difference between the accumulated amount (future value) and the present value of an investment?  Give examples of each.

* This is just a discussion question. Response does not need to be long but at least 75 to 150 words.

Ahmedca
School: Cornell University

Future value is defined as amount of future value of money shows the benefit of investing and earning interest. The formula for calculating the future value is (1+r)^n.

Present value of investment is defined as value of money at present date/today. The formula for calculating the present value of an investment is 1/(1+r)^n

suppose you invest \$1000 at the end of each year for 10 years @ 10% interest

FV = PMT((1+r)^n-1)/r

so FV = 1000(1.1^10-1)/0.1 = \$15,937.42 <----------

to get the PV, PV = FV /(1+r)^n = 15,937.42 /1.1^10 = \$6144.57 <----------

the direct formula for PV is
PV = PMT(1 - (1+i)^-n )/r = 1000(1 - 1.1^-10)/0.1 = \$6144.57, as before,

but the basic funda is FV = PV(1+r)^n or PV = FV/(1+r)^n

flag Report DMCA
Review

Anonymous
Tutor went the extra mile to help me with this essay. Citations were a bit shaky but I appreciated how well he handled APA styles and how ok he was to change them even though I didnt specify. Got a B+ which is believable and acceptable.

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors