To determine how much you need to invest today to have $700 in the future, you use the present value formula:
PV=FV(1+r)nPV=\frac{FV}{(1+r)^n}PV=(1+r)nFV
where:
- PVPVPV = present value (amount to invest today)
- FVFVFV = future value ($700)
- rrr = annual interest rate (expressed as a decimal)
- nnn = number of years
For example, if you want $700 in 5 years and the interest rate is 6%, then:
PV=700(1+0.06)5=7001.3382≈523.15PV=\frac{700}{(1+0.06)^5}=\frac{700}{1.3382}\approx 523.15PV=(1+0.06)5700=1.3382700≈523.15
So, you would need to invest approximately $523.15 today to reach $700 in 5 years at 6% interest
. If you have a different interest rate or number of years, just plug those values into the formula or use an online present value calculator for quick results
