What is the future value of an annual deposit of $800 earning 6 percent for 15 years?
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Compound Interest means that you earn "interest on your interest", while Simple Interest means that you don't - your interest payments stay constant, at a fixed percentage of the original principal. First, a calculator to let you see the difference. Show
The lesson is that compound interest is a better investment, which seems both obvious and moot - after all, bank accounts always pay compound interest anyway. Even a bond investment is really compound interest if you think about it: you get fixed coupons (that's simple interest) but you can invest them to get interest on them (ergo compound interest). The situation where simple interest occurs naturally is when the principal doesn't change over time. This is true with an interest-only mortgage, for example, where your monthly payments only pay the interest on your loan, but don't pay down the loan itself. Simple Interest FormulaLets say that P is your starting principal (spelled -pal and not -ple, because Your Money is Your Pal), r is the interest rate (expressed as a decimal), and Y is the number of years you invest. Then your future value will be:
Note the two formulas give the same answer for one year. After that, compound interest takes off.
This present value calculator can be used to calculate the present value of a certain amount of money in the future or periodical annuity payments. Present Value of Future Money
Present Value of Periodical Deposits
Balance Accumulation Graph Schedule
Present ValuePresent Value, or PV, is defined as the value in the present of a sum of money, in contrast to a different value it will have in the future due to it being invested and compound at a certain rate. Net Present ValueA popular concept in finance is the idea of net present value, more commonly known as NPV. It is important to make the distinction between PV and NPV; while the former is usually associated with learning broad financial concepts and financial calculators, the latter generally has more practical uses in everyday life. NPV is a common metric used in financial analysis and accounting; examples include the calculation of capital expenditure or depreciation. The difference between the two is that while PV represents the present value of a sum of money or cash flow, NPV represents the net of all cash inflows and all cash outflows, similar to how the net income of a business after revenue and expenses, or how net benefit is found after evaluating the pros and cons to doing something. The inclusion of the word 'net' denotes the combination of positive and negative values for a figure. The Time Value of MoneyPV (along with FV, I/Y, N, and PMT) is an important element in the time value of money, which forms the backbone of finance. There can be no such things as mortgages, auto loans, or credit cards without PV. To learn more about or do calculations on future value instead, feel free to pop on over to our Future Value Calculator. For a brief, educational introduction to finance and the time value of money, please visit our Finance Calculator. How do you calculate the future value of an annual deposit?If you deposit $100, at the end of one year with the interest rate of 5% and if the number of years is 1 year, then you can read the formula as follows: "The future value (FV) at the end of one year equals the present value ($100) plus the value of the interest at the specified interest rate (5% of $100 or $5)."
What is the future value of $10000 on deposit for 5 years at 6% simple interest?The future value of $10,000 with 6 % interest after 5 years at simple interest will be $ 13,000.
What is the future value of $1000 after 5 years at 8% per year?What is the future value of $1000 after 5 years at 8% per year? If compounding monthly, $1,489.85 is the total compound interest value after five years.
What is the future value of $10000 on deposit for 2 years at 6% simple interest?The future value of $10,000 on deposit for 2 years at 6% simple interest is $11200.
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