Calculating Future Value
Posted by Professor Cram in Time Value of Money
Annuities: Calculating Future Value
Future value is a term given to the amount of money we would have at some point in the future, based on what happens between now and then. Use this tutorial to learn how to calculate the future value of an annuity given the present value, periodic interest rate, and number of periods.
Future Value and Compounding
Future value is a result of the compounding of interest earned on the present value, or starting amount. As time progresses, the periodic interest is added to the starting amount and the next periodic interest amount is calculated based on that.
As such, the amount of interest earned over the entire time period can be found by subtracting the present value from the future value:
Amount of Interest = FV – PV
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thanks so much… i had a hard time trying to ge the formulas down.. I appreciated the explanations… instead of the answers.
what is the total interest for USD 100,000 at 7 percent for ten years.
In 10years a machine costing rs.40,000 will have a scrap value of rs.4000 .a new machine at that time is expected to sell for rs 52000. in order to prvide funds for the difference between the replacement cost and the scrap value,a sinking fund is set up into which equal payments are placed at the end of each year. if the fund earns interest at 7% compounded annually , how much should each payment be?.