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Present and Future Value

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cmarquardt94's version from 2016-09-08 00:03

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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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