Time Value of Money Day Beginning Value Ending

Time Value of Money

Day Beginning Value Ending Value 1 $0. 02 2 $0. 04 3 $0. 04 $0. 08 $0. 16 5 $0. 16 $0. 32 $0. 64 7 $0. 64 $1. 28 8 $1. 28 $2. 56 9 $2. 56 $5. 12 10 $5. 12 $10. 24 11 $10. 24 $20. 48 12 $20. 48 $41. 00 13 $41. 00 $82. 00 14 $82. 00 $164. 00 15 $164. 00 $328. 00 16 $328. 00 $655. 00 17 $655. 00 $1, 311. 00 18 $1, 311. 00 $2, 621. 00 19 $2, 621. 00 $5, 243. 00 20 $5, 243. 00 $10, 486. 00 21 $10, 486. 00 $20, 972. 00 22 $20, 972. 00 $41, 943. 00 23 $41, 943. 00 $83, 866. 00 24 $83, 886. 00 $167, 772. 00 25 $167, 772. 00 $335, 544. 00 26 $335, 544. 00 $671, 089. 00 27 $671, 089. 00 $1, 342, 177. 00 28 $1, 342, 177. 00 $2, 684, 356. 00 29 $2, 684, 356. 00 $5, 368, 711. 00 30 $5, 368, 711. 00 $10, 737, 422. 00

Future Value of Money • • The value of an investment after it has been compounded with interest for a specific period of time Compound Interest is a very powerful tool in making your money work for you.

Ways to figure the future value of money n n Future value formula Future Value = P ( 1+ I )n Where P=principle I=interest n=years Future value Table Multiply principle times factor in table Factor based on years and interest

FV of $5, 000 in 5 years if interest is 5%? Formula method n FV = Principle(1 +interest)years n FV = 5, 000 (1. 05)5 n FV = 5, 000 (1. 34) n FV = $6, 400 n

Future Value of $5000 in 5 years if interest is 5% Table method n FV = Principle X Value from table n FV = $5000 X 1. 28 = $6400 n

FUTURE VALUE TABLE INTEREST YEAR 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 1 1. 04 1. 05 1. 06 1. 07 1. 08 1. 09 1. 10 1. 11 1. 12 1. 15 2 1. 08 1. 10 1. 12 1. 14 1. 17 1. 19 1. 21 1. 23 1. 25 1. 32 3 1. 12 1. 16 1. 19 1. 23 1. 26 1. 30 1. 33 1. 37 1. 40 1. 52 4 1. 17 1. 22 1. 26 1. 31 1. 36 1. 41 1. 46 1. 52 1. 57 1. 75 5 1. 22 1. 28 1. 34 1. 40 1. 47 1. 54 1. 61 1. 69 1. 76 2. 01 6 1. 27 1. 34 1. 42 1. 50 1. 59 1. 68 1. 77 1. 87 1. 97 2. 31 7 1. 32 1. 41 1. 50 1. 61 1. 71 1. 83 1. 95 2. 08 2. 21 2. 66 8 1. 37 1. 48 1. 59 1. 72 1. 85 1. 99 2. 14 2. 30 2. 48 3. 06 9 1. 42 1. 55 1. 69 1. 84 2. 00 2. 17 2. 36 2. 56 2. 77 3. 52 10 1. 48 1. 63 1. 79 1. 97 2. 16 2. 37 2. 59 2. 84 3. 11 4. 05 15 1. 80 2. 08 2. 40 2. 76 3. 17 3. 64 4. 18 4. 78 5. 47 8. 14 20 2. 19 2. 65 3. 21 3. 87 4. 66 5. 60 6. 73 8. 06 9. 65 16. 37 25 2. 67 2. 39 4. 29 5. 43 6. 85 8. 62 10. 83 13. 59 17. 00 32. 92 30 3. 24 4. 32 5. 74 7. 61 10. 06 13. 27 17. 45 22. 89 29. 96 66. 21 35 3. 95 5. 52 7. 69 10. 68 14. 79 20. 41 28. 10 38. 57 52. 80 133. 18 40 4. 80 7. 04 10. 29 14. 97 21. 72 31. 41 45. 26 65. 00 93. 05 267. 86

Present Value of Money § § n n n The current value of an investment after it has been discounted PV = Principle ( 1_____) ( 1 + interest)years PV of $2, 000 if interest is 8% and time is 5 years PV = 2, 000 (_____1____) (1 +. 08)5