2.1 Net Present Value : FV and PV
•
The amount that a borrower would need to set aside
today to to able to meet the promised payment of
$10,000 in one year is call the Present Value (PV) of
$10,000.
Note that $10,000 = $9,523.81×(1.05).
•
If you were to invest $10,000 at 5-percent interest
for one year, your investment would grow to
$10,500 : $10,500 = $10,000×(1.05).
The total amount due at the end of the investment is
call the Future Value (FV).