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Future Value (FV)
Present Value (PV)
FV = PV (1 + r)n
PV = FV / (1 + r)n
What do you prefer--1000 dollars today or 1000 dollars one year from now? Why?
If the interest rate is 5 percent (r = 0.05), what is the future value of 1000 dollars received now in one year? Two years? Three years? Why?
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