Use the formula- FV/(1+r)^n make up a scenario of a particular asset or investment and describe how it would be valued. How much more would it be worth in a particular amount of time?

See below

Explanation:

The formula in reference is a re-arrangement of the compound interest rate formula. The compound rate formula is used to calculate the future balance of a compound interest-earning account.

This particular formula is worked backward to calculate how much investment is needed to achieve a set goal.

For example, you desire to have $5000 in your account after six years. The bank pays an interest rate of 5%, how much must you save today to achieve your target?

Today amount will be the PV

FV = $5000

r=5%

n= 6years

PV = $5000/(1+5/100)6

PV=$5000/(1+0.05)6

pv = 5000/1.340095

pv=3,731.10

Meaning  $3.731.10 will grow to $5000 after six years when invested in an account earning 5% compound interest.

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explanation:

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