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by PBworks15 years, 9 months ago
Future Value
value of sum after investing over one or more periods
$1 today at 12% interest, will be worth $1.12 in a year, and $1.25440 in two years.
Fn = P(1+r)^n
Fn = future value
P = present investment value (one time)
r = interest rate per period
n = number of periods from today
Using Tables
One common method for solving present value problems is to use financial tables (as found in most common text books,or online). The present value tables give you the "present value factor", which can be used simply to find the present value.
All the tables have really done is calculated the exponent for you. For example, a 10 percent interest, for 5 years, will have (1+r)^n = (1.10)^5 = 1.61051 (which you can get by typing in 1.10 x 1.10 five times in your calculator), or you can just look it up in a table, and find 1.61051. So, $1 will be worth $1.61 in 5 years if you earn 10% per year. The 1.61051 is called the Future value factor.
In this wiki, you will find a collection of the students notes on a variety of global issues, with a focus on international finance, international relations, politics and business. Clearly not all of the content is our own, nor do we endorse students opinions posted on our pages. There have been many contributors to this site, and our role is just to moderate the content and make sure it fits the "GloboTrends" theme. We try to link properly and send readers to other interesting news sites. If you see any inappropriate material, please let us know.
What are "GloboTrends?"
“GloboTrends” are fundamental underlying trends, which means that they are important, but might not be obvious. Many trends are interconnected, and have global implications. Not paying attention to the development of global trends in can come back to haunt any business person, and so… we have dedicated ourselves to summarizing these events in simple language, and we are trying to show how these events might be important to different regions, and to different industries.
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