# Present and Future Value

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cmarquardt94's
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2016-09-08 00:03

## Section

Question | Answer |
---|---|

what is Future Value? | we say Future Value (FV), of a payment, (PV), is the amount to which (PV) would have grown if deposited today in an account with interest |

what is Present Value, (P)? | Present Value (PV), of a future payment, (FV), is the amount that would have to be deposited in a bank account today to produce exactly (FV), Future Value |

What does the relation between present and future values depend on? | the interest rate (whether it is compounded annually or compounded continuously) |

What is the Future Value (FV) formula for interest compounded annually? | FV = PV(1 + r)^t |

What is the Present Value (PV) formula for interest compounded annually? | PV = FV / (1 + r)^t |

What is the Future Value (FV) formula if interest is compounded continuously? | FV = PV(e)^rt |

What is the Present Value (PV) formula for interest compounded continuously? | PV = FV / e^rt |

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