Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
What is the
Expert Solution
Introduction and Formula
Solution:-
When some amount of money is invested somewhere, it earns interest on it. The amount initially invested is called present value and amount at maturity is called future value.
So, we have,
FV = PV (1+r)n
where, FV = future value
PV = present value
r = periodic interest rate
n = number of periods
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