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Present value and future value


In the formula M = P. (1 + i)no , the main P is also known as Present value (PV = present value) and the amount M is also known as Future Value (PV = future value).

So this formula can be written as:

PV = PV. (1 + i)no

Isolating PV in the formula we have:

PV = FV / (1 + i)no

On the HP-12C calculator, the present value is represented by the PV key. With this same formula, we can calculate the future value from the present value.

Example:

How much will we have 12 months from now if we apply $ 1,500 at 2% per month?

Solution:

FV = 1500. (1 + 0.02)12 = $ 1,902.36