二、Investment Tools: Quantitative Methods
1.A.: Time Value of Money
a: Calculate the future value (FV) and present value (PV) of a single sum of money.
Future Value:
FV = PV(1 + I/Y)N
Where PV = the amount of money invested today, I/Y = the rate of return, and N = the length of the holding period.
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Example:Using a financial calculator, here's an example of how you would find the FV of a $300 investment (PV), given you earn a compound rate of return (I/Y) of 8% over a 10-year (N) period of time:
N = 10, I/Y = 8, PV = 300; CPTFV = $647.68 (ignore the sign).
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Present Value:
PV = FV / (1 + I/Y)N