How To Convert A Present Value To A Future Value Explained - Formula For Future Value
In this video we discuss how to convert a present value of money to a future value of money. We go through the formula and a few examples showing the conversion
Transcript/notes
If we are given that the present value of an investment is $1500, the annual rate is 7.5%, it is compounded quarterly, so 4 times per year, and it is a 5 year investment, what is the future value of the investment?
Here is the future value formula and all of the definitions of all of the variables. So, we plug into the formula, and we have future value equals, $1500 times the quantity, 1 plus .075, the decimal value of 7.5%, divided by 4, raised to the 4 times 5.
I have done all of the steps and calculations on the screen, and we get future value equals, $2174.92 rounded off.
Here are a couple more examples of converting a present value to a future value.
Chapters/Timestamps
0:00 Example set up of converting a present value to a future value
0:14 Formula for future value
0:44 More examples of future values
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