Chapter 4, Problem 3PROB

Summary Introduction

F plans to invest $500 for 20 years at 12%. The future value is to be calculated at different compounding periods.

Future value is the value of the current investment or series of payments in the future compounded at predetermined interest rate for a specified period.

$FV=PV{\left(1+\frac{r}{m}\right)}^{n\times m}$

Here,

The future value is “FV”.

The present value is “PV”.

The interest rate is “r”.

The maturity period of time period is “n”.

The no of compounding in a year is “m”.