“From small beginnings come great things” – this old saying is always true, especially in finance. Understanding how to calculate Future Value (FV) and Present Value (PV) is not only foundational knowledge in applied informatics but also a key to effective personal financial management. “Getting rich is not difficult” if you grasp these basic principles. Let’s explore with HỌC LÀM!
Understanding FV and PV: The Foundation of Financial Management
Future Value (FV) is the value of an investment at a certain point in the future, based on a specific interest rate. Present Value (PV), on the other hand, is the current value of a sum of money to be received in the future, discounted back to the present at a certain interest rate. Simply put, FV shows you how “money makes money,” while PV helps you know “where the money is now” in the flow of time.
Prof. Dr. Nguyen Van An, in his book “Secrets to Getting Rich From Applied Informatics,” affirmed: “Mastering FV and PV is the first step to taking control of personal finances.” Indeed, from calculating home loan interest rates to planning long-term investments, FV and PV play a pivotal role.
How to Calculate FV and PV in Applied Informatics
In applied informatics, calculating FV and PV has become easier than ever thanks to tools like Excel, Google Sheets, or specialized financial software. Built-in formulas help you calculate quickly with just a few simple steps.
FV Formula:
FV = PV * (1 + r)^n
Where:
- FV: Future Value
- PV: Present Value
- r: Periodic interest rate
- n: Number of periods
PV Formula:
PV = FV / (1 + r)^n
Where:
- PV: Present Value
- FV: Future Value
- r: Periodic interest rate
- n: Number of periods
For example, if you deposit 10 million VND with an interest rate of 6% per year for 5 years, FV will tell you how much money you will receive after 5 years. Conversely, if you want to have 15 million VND after 5 years, PV will tell you how much money you need to deposit right now.
Real-World Applications of FV and PV
From calculating home loan interest rates in Hanoi to long-term stock investments, FV and PV are indispensable tools. Even when you choose between buying a motorbike on installment or paying in full, applying PV helps you make sound financial decisions. According to Ms. Le Thi Huong, a math teacher at Le Hong Phong High School for the Gifted in Ho Chi Minh City: “Understanding how to apply FV and PV is key for students to apply mathematical knowledge to real life.”
Frequently Asked Questions About FV and PV
- How to calculate FV and PV when the interest rate changes periodically?
- What software effectively supports FV and PV calculations?
- How are FV and PV applied in evaluating investment projects?
Learn and Do with You
On your journey to conquer knowledge and master finance, HỌC LÀM is always with you. Please contact Phone Number: 0372888889, or visit the address: 335 Nguyen Trai, Thanh Xuan, Hanoi. We have a 24/7 customer care team.
Hopefully, this article has helped you better understand how to calculate FV and PV in applied informatics. Please leave a comment, share this article, and explore more useful knowledge on the HỌC LÀM website!