What is the difference between the accumulated amount future

What is the difference between the accumulated amount (future value) and the present value of an investment? Give examples of each.

Solution

THE DIFFERENT IS THEIR VALUE

THE VALUE OF MONEY IN THE FUTURE IS GREATER THAN THE PRESENT VALUE

WHY? BECAUSE THE MONEY EARN A RATE OF INTEREST AND IT DEPENDS OF HOW MUCH YEARS, MONTH OR DAYS IS CAPITALIZABLE

Present value is what all the money is worth today. If you won the lottery they will pay you 25K/year or something like that, but over time what is that money worth to you today after interest

Future value is the opposite. If you win the lottery and they give you 25K for 10 years, the future value is 250,000. Or if you deposit 100 bucks into a CD, with interest, the future value is worth


The formula is

PVX(1+r)^t=FV

PV is present value
FV is future value
t is time in years
r is interest rate