Present value vs future value

Рет қаралды 7,548

11 ай бұрын

An example of how to calculate Future Value.
How much money will I have two years from now if I invest $100 at an expected 20% annual return?
Start with $100 today. $100 multiplied by 1.2 is $120. This $120 in turn multiplied by 1.2 is $144.
An example of how to calculate Present Value.
How much money do I invest today to have $144 two years from now at an expected 20% annual return?
Start with $144 in the future. $144 divided by 1.2 is $120. Then divide the $120 once again by 1.2 to get to $100 today.
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Пікірлер: 13

@kbelamin Ай бұрын

Wow quickest easiest explanation to the concept . Great job

@TheFinanceStoryteller Ай бұрын

Thank you so much! 😊

@ZulfAliGhanizada Ай бұрын

Fv= P(1+i)

@neodyinrich 6 күн бұрын

Thankkk youuu

@TheFinanceStoryteller 6 күн бұрын

You're welcome 😊 Here's how to apply these concepts in a Net Present Value calculation: kzfaq.info/get/bejne/hJOcgZiptLitp5c.html&pp=gAQBiAQB

@RyanDaMannn 9 ай бұрын

Your channel has been so helpful to me, thank you!!

@TheFinanceStoryteller 9 ай бұрын

So happy to hear that! Please share it with friends and colleagues. 😊

@sayndrape9469 9 ай бұрын

Thanks

@TheFinanceStoryteller 9 ай бұрын

Happy to help! Thank you for watching.

@cheesecakeoreo9362 7 ай бұрын

How did you get 1.2 ?

@TheFinanceStoryteller 7 ай бұрын

Just for illustration purposes. I assume 20% return. 1 + 20% = 1 + 0.2 = 1.2.

@cheesecakeoreo9362 7 ай бұрын

@@TheFinanceStoryteller oh wow! Thank you! So, for me to fully understand this; why do you have to add 1 ?

@TheFinanceStoryteller 7 ай бұрын

For the future value part, $100 = 100%. A return of 20% on that equals $20. Then the total is $120, which is 120% of what you started with. 100% is the same as 1.