Compounding Techniques

The FV of a single amount

The process of investing money as well as reinvesting the interest thereon is called compounding. The future value or compounded value of an investment after n years, when interest rate is r percent, is given by:

FV       =          PV (1 + r) ⁿ

Where,              FV       =          Future value

PV       =          Present value (given)

r           =          % Rate of interest, and

n          =          Time gap after which FV of to be ascertained

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