2.2 COMPUTATION OF FUTURE VALUE
2.2.1 Future Value of a Single Amount
The future value of an amount at the end of Period 1 (A1) will be equal to the product of the original value (P ) and the rate of interest plus 1. This can be expressed in the form of an equation as follows:
Here the subscript denotes the end of the specific period.
EXAMPLE
If P is Rs 100 and r is 10%, A after a 1-year period will be:
Rs 100 × 1.10 = Rs 110.
Similarly the future value of the amount P at specific rate of interest r at the end of Period 2 will be:
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