Manipulating the Future Value Equation
  • Manipulating the Future Value Equation
  • Manipulating the Future Value Equation
  • Manipulating the Future Value Equation
Originally published: 24/09/2018 14:33
Publication number: ELQ-27288-1
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Manipulating the Future Value Equation

This video, by David Burrell, explains how to manipulate the Future Value equation by rearranging the formula.

accountingcorporate financefuture valuefvlessonpotential valuepv

"When I was growing up as a kid, I was fairly sneaky, and I would manipulate certain situations or maybe my parents in order to get certain toys like possibly the Pokémon red or Pokémon blue for Gameboy pocket. But in this tutorial we're not gonna be manipulating any people or any situations, we're just manipulating equations.

So we're gonna be taking the equation which is known as Future Value is equal to Present Value times 1 plus r to the power of t, and then we'll manipulate it essentially solve any variable, and you can this as long as just one variable is missing. If two variables are missing, we're gonna use some method like elimination, substitution or define the solution.

So, first up let's find what the present value is. So Future Value, equal to Present Value, I'll put a little dot to show the multiplication sign, 1+r to the power of t. To isolate for a PV we're gonna divide the right-hand side by 1+r to the power of t, and by doing this we're actually gonna cancel this out because the opposite multiplication is division. So when we divide by 1+r to the power of t, or divide by itself, will just be left with 1..." (to access the rest of this content please refer to the video)

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