[SOLVED] Present value which is also considered present discounted value is the expected income determined at the date of valuation.
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Present value which is also considered present discounted value is the expected income determined at the date of valuation. The present value formula is the formula that calculates that present value. Present value formula is as follows: PV= FV/(1+R) ^N. R is the interest rate, and N is time. An example of present value being used with the numbers given is as follows: PV=1000000/(1+.08)300 = 146,017.90. This means that to have a present value at one million dollars there would have needed to be 146,017.19 invested every year for 25 years at a 8 percent interest. It will then equal that $1 million dollar in the present time.
Future value formula will show you how much money you will save a specific time at a specific interest rate. This can be very important if you know how much you afford. The future value formula is as follows: FV=I×(1+(R×T)). I is the investment amount, r is the interest rate and t is time. An example of the future value being used with the numbers is as follows: FV=1000 x (1+(.08 x 25) = $14,159.07. This means that a $1 million dollar investment will be worth $14,159.07 over the course of 25 years at an 8% interest rate.