SUMMARY
An investment yields interest over the period for which it is made. Interest exists because of the preference for immediate consumption. It is because of this interest rate that money has a time value. The future value of an investment made today is equal to the sum of its present value and the interest compounded at regular intervals. The greater the number of compoundings in a year, the greater is the APY or the effective interest rate. The future value can be computed for a single investment, a series of investments of unequal amounts or for an annuity implying a uniform cash flow. The annuity may be a regular annuity, an annuity due, a perpetual annuity or a deferred annuity.
The calculation of the present value of an amount of future ...
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