# Finance: Future value and present value

### Finance: Future value and present value

In this section, we will revisit the connection between mathematics and finance, but from a different perspective. We will see how a slight variation of the Compound interest formula can help us understand some of the core concepts in Finance – Future value and Present value.

#### Lessons

future value and present value: ${ FV = PV (1+\frac{r}{n})^{nt}}$

${FV}$: Future Value
${PV}$: Present Value
${r}$ : Annual interest rate
${t}$: total time given in years
${n}$ : number of times compounded in a year, if
 Compound daily: n = 365 Compound monthly: n = 12 Compound quarterly: n = 4 Compound semi-annually: n = 2 Compound annually: n = 1
• 1.
What is the future value of $30,000 which grows at an annual interest rate of 11%, compounded monthly, for three years? • 2. What is the present value of$15,000 sixteen months from now if the annual discount rate is 10%, compounded quarterly?