Finance

Money loses value as time goes on

Time value of money- r=10%

Compound interest- adding an extra year of investment causes an extra 1 to be gained (10% of the 10$ gained from last year)

FV=PV (1 + r)^T. T is the number of periods in which the interest rate is earned.

PV=FV/(1 + r)^10

Annuity formula- C/R[1-1/(1-r)^T]