If we look at the formula to calculate the dollar amount of a $1 we put into savings today, we see that it is fv = pv*((1+i)^n). The variables are fv = future value, pv = present value, i = interest rate per period, and n = number of periods. In the formula, n is an exponent. What does the exponent in this case tell us we need to do mathematically to the (1 + i) segment of the formula? Select a different interest rate (i) than your classmates who have already answered this question, as well as a different number of periods (n). How much money would you have at the end if you invested $1 today (pv)?
The exponent "n" is actually the number of years for which we have saved the money. So... View the full answer