What is the difference between future value and present value? Which
approach is generally preferred by financial managers? Why? Discuss your
reasoning.
FUTURE VALUE IS The value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today while present value is The current worth of a future sum of money or stream of cash flows given a specified rate of return. The approach that is generally preferred by managers is future value because if a person invested $1000 for 5 years with simple annual interest of 10% would have a future value of $1,500.00.
Future value is the value of assets on a specific date, meaning in the future it has a certain interest rate, on the other hand present value is the value in the present of some money, but in the future it will become money that was invested. Financial managers will whether have someone invest in future value s due to the interest that they will make off of the sum of present money that was invested for the future.
Future value is the value of money on a certain date with a specific interest rate, however present value is the present value of money in the present time which will eventually become future money or value that was invested, which the money will then make interest from the present money being invested. Majority of financial mangers will whether someone use future value on money to gain that extra payments on the present money which is called interest rates from the present money for the future value.
Future Value is the value of an asset at a specific date. Present value is a formula used in finance used to calculate the present day value of an amount that is received at a at a future date, Future value is the most preferred because if a certain amount of money is invested then the future value of that investment is increased.
The future value is the amount to which a single payment will grow, and the present value is the value of a dollar to be received in the future. The approach that is generally preferred by financial managers is the future value, because the amount of money that will be in the account after any given number of years increases with the predetermined interest rate.
The difference between future value and present value is : Future value will be the amount money in your account will increase with interest rate after so many years growing in your account. The present value is: the amount of money will discounting in a later time without no interest rate. And future value is preferred by managers because future value have the advantage of the money you save the more money you make in a later time with interest rate.
Future Value as i found from my research is the value of an asset at a specific date. Present value is a formula created and implemented for use in finance to calculate the present day value of any amount that is received at a future date or in the present this include how the interest value is calculated and shows how much has been gained in a certain period.
Present Value- is the worth of your investment in the beginning Future Value- the worth of your investment in the future compared to today
I believe financial manager would prefer future value because they want to see how much their investment can grow if they put money into it rather than what it is currently worth.
Teachmefinance.com explained it best for me. Present Value: is what you've NOW Future Value: The amount that GROWS, when compounded at a given rate, from what you have now Also, as far as the managers approach, the present value is preferred. To make financial decisions NOW, the Now prices must be know. Because it's the Now money that will be used to manifest Tomorrows money/profit/investment....
Please correct if wrong, this is just what I'm understanding. :)
FUTURE VALUE IS The value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today while present value is The current worth of a future sum of money or stream of cash flows given a specified rate of return. The approach that is generally preferred by managers is future value because if a person invested $1000 for 5 years with simple annual interest of 10% would have a future value of $1,500.00.
ReplyDeletei like that you added a little example good job.
DeleteFuture value is the value of assets on a specific date, meaning in the future it has a certain interest rate, on the other hand present value is the value in the present of some money, but in the future it will become money that was invested. Financial managers will whether have someone invest in future value s due to the interest that they will make off of the sum of present money that was invested for the future.
ReplyDeleteFuture value is the value of money on a certain date with a specific interest rate, however present value is the present value of money in the present time which will eventually become future money or value that was invested, which the money will then make interest from the present money being invested. Majority of financial mangers will whether someone use future value on money to gain that extra payments on the present money which is called interest rates from the present money for the future value.
ReplyDeleteFuture Value is the value of an asset at a specific date. Present value is a formula used in finance used to calculate the present day value of an amount that is received at a at a future date, Future value is the most preferred because if a certain amount of money is invested then the future value of that investment is increased.
ReplyDeletegreat answer i feel the same way, good explanation
DeleteThe future value is the amount to which a single payment will grow, and the present value is the value of a dollar to be received in the future. The approach that is generally preferred by financial managers is the future value, because the amount of money that will be in the account after any given number of years increases with the predetermined interest rate.
ReplyDeleteThe difference between future value and present value is : Future value will be the amount money in your account will increase with interest rate after so many years growing in your account. The present value is: the amount of money will discounting in a later time without no interest rate. And future value is preferred by managers because future value have the advantage of the money you save the more money you make in a later time with interest rate.
ReplyDeleteFuture Value as i found from my research is the value of an asset at a specific date. Present value is a formula created and implemented for use in finance to calculate the present day value of any amount that is received at a future date or in the present this include how the interest value is calculated and shows how much has been gained in a certain period.
ReplyDeletePresent Value- is the worth of your investment in the beginning
ReplyDeleteFuture Value- the worth of your investment in the future compared to today
I believe financial manager would prefer future value because they want to see how much their investment can grow if they put money into it rather than what it is currently worth.
Teachmefinance.com explained it best for me.
ReplyDeletePresent Value: is what you've NOW
Future Value: The amount that GROWS, when compounded at a given rate, from what you have now
Also, as far as the managers approach, the present value is preferred. To make financial decisions NOW, the Now prices must be know. Because it's the Now money that will be used to manifest Tomorrows money/profit/investment....
Please correct if wrong, this is just what I'm understanding. :)