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Finance: Future value and present value

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Now Playing:Finance future value and present value– Example 1
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  1. What is the future value of $30,000 which grows at an annual interest rate of 11%, compounded monthly, for three years?

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

    FV {FV} : Future Value
    PV {PV} : Present Value
    r {r} : Annual interest rate
    t {t} : total time given in years
    n {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