Concept #1: Future Value Calculations

Practice: You invest $4,545 in Clutch Bank today earning a juicy 10% annual interest. What is the value of your investment in one year? What is the value of the investment after two years?

Practice: Using a little bit of algebra, we can rearrange the time value of money formula: *FV = PV* x (1 + r)n

The formula *FV = PV* x (1 + r)n is best used for:

Practice: You are saving up $12,000 for a luxurious European vacation two years from now. How much money would you need to invest today at Clutch Bank, earning their juicy 10% annual interest, to have enough for your vacation?

Practice: You are saving up $12,000 for a luxurious European vacation two years from now. How much money would you need to invest today at Clutch Bank, earning their juicy 10% annual interest, to have enough for your vacation? How much would you need to invest today, if instead you could only earn 6% interest?