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.
Philip de Vroe (The Finance Storyteller) aims to make accounting, finance and investing enjoyable and easier to understand. Learn the business and accounting vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better investing decisions. Philip delivers #financetraining in various formats: YouTube videos, livestreams, classroom sessions, and webinars. Connect with me through Linked In!
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