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Write the Relations between Future value and present value? And And how each one of them affects ?______ i attach sample answer for some student to take the idea , pleaes not take the same answer , urgent please):Visible to participants on this course The PV and FV Measures the change in the value of money over a certain period of time The future value basically measures the nominal future sum of money and how much it will be worth in the future given a certain discount rate The Present value measures the value of money at the current point of time given a certain discount rate as well The PV and FV have a direct relationship as the FV is calculated by multiplying the present value by the accumulation function
Write the Relations between Future value and present value? And And how each one of them affects ?______
i attach sample answer for some student to take the idea , pleaes not take the same answer ,
urgent please):Visible to participants on this course The PV and FV Measures the change in the value of money over a certain period of time The future value basically measures the nominal future sum of money and how much it will be worth in the future given a certain discount rate The Present value measures the value of money at the current point of time given a certain discount rate as well The PV and FV have a direct relationship as the FV is calculated by multiplying the present value by the accumulation function. So when One increase the other one increase. If the Present value increase, means the future value will increase as well assuming that the Interest rate and number of periods remains constant PV and FV are related and they reflect compounding interest as it is hard to use the simple interest and it is explained by the following formula FV=PV(1+r)^n
Expert Solution
Present Value = Present Value is how much future sum of money worth today. As how much to save today to have a certain amount in future. It is also called discounted value.
Present value = Cash flow / ( 1 + r )n
for example = Let's assume that you are going to received 100000 after 5 years and market interest rate is 8% now we want to know what is the Pv of 100000.
Present value = 100000/(1+ 0.08)5 = 68058
Future Value = Future value is the amount of money that will grow over a period of time with simple or compounded interest.
Future value = PV ( 1+r ) n
for example = Let's assume that if one invest 68058 per year for next 5 years at 8% interest rate than future value of after 5 year
Future value = 68058 ( 1 + 0.08 )5 = 100000
Now, If we see there is a direct relationship between future value and present value, if one increase then other will also increase if interest rate and number of periods are constant.
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