Loop in r to calculate savings4/7/2024 ![]() ![]() You open a savings account that accrues 5 percent interest each year. Let's say that in 10 years, you'd like to have $10,000 to put towards your child's college tuition. N = Number of periods remaining How Does It Work? Should you wish to start saving money for your child's college tuition, for example, you'll need to know how much money to deposit initially to reflect its future value.īut how do you find the current value of a future sum of money? Using a concept called present value, we can determine how much a certain amount of money in the future is actually worth today. ![]() This is, of course, due to things like inflation and interest rates.įor the average citizen, this might be an especially valuable piece of information when deciding to open a savings account. What is the Present Value of a Future Sum of Money?Īs you know, the amount of money you have today will be worth a different amount in the future. ![]()
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