00:01
This is a time value of money problem where we are trying to find the future value of a certain investment.
00:06
So let's write our variables off to the side.
00:10
We've got present value, future value, interest, and then n, which is number of periods.
00:18
So we're told the present value is $800.
00:21
We're trying to figure out the future value.
00:25
The interest rate is 6%.
00:28
And the number of periods is 5 years.
00:31
So the formula for this is future value equals present value times the future value of a single sum with respect to n and i.
00:47
So this piece right here i'm going to write out what it is, but you can also use your table and go to the row for n equals 5 and the 6 % column to find the decimal that we're going to calculate.
01:05
So it's written out.
01:07
It looks like this...