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The Future Value(FV) equation is FV=PV(1+i)n, where the Present Value (PV) increments for every period into the future by a variable of 1+i.
Factors to find the Future Value (FV) of a Present Value (PV) in addition to premium and income installments:
Present Value PV
Number of time periods t
Interest Rate R
Compounding m
Cash flow annuity payment amount PMT
Growth rate G
Number of payments q per period
When do annuity payments occur T
Future Value FV
Question:
Suppose you have,
Solution:
Step 1: FV=15,000(1+0.015/12)12∗10+1000.015/12((1+0.015/12)12∗10−1)(1+(0.015/12)∗0)
Step 2: FV=15,000(1.00125)120+1000.00125((1.00125)120−1)
Step 3: FV=17,425.88+92,938.03−80,000=$30,361.91
Final Step: FV = 17,425.88 + 92,938.03 - 80,000 = $30,361.91
At the end of 10 years your savings account will be worth $30,363.91
So, after 10 successful years your total account savings will be Approx. $30,363.91.
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Finance is the study of how individuals, businesses, and organizations manage their money in order to achieve their financial goals. It involves the identification, management, and allocation of financial resources in order to maximize their value.
The key principles of finance include the time value of money, the risk-return trade off, the role of diversification, and the efficient market hypothesis.
There are two main types of financial markets: capital markets and money markets. Capital markets are where long-term securities, such as stocks and bonds, are traded. Money markets are where short-term securities, such as Treasury bills and commercial paper, are traded.
The purpose of financial statements is to provide information about a company's financial performance and position. This information is used by investors, creditors, and other stakeholders to make decisions about the company. Financial statements typically include the balance sheet, income statement, statement of cash flows, and statement of stockholders' equity.
There are many different types of financial ratios, but some of the most common include liquidity ratios, profitability ratios, and solvency ratios. Liquidity ratios measure a company's ability to meet its short-term obligations, profitability ratios measure a company's ability to generate profits, and solvency ratios measure a company's ability to meet its long-term obligations.
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