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Future Value of a Single Deposit
$100 deposited for 10 years at 7% per year
Using Table 1-3a:
FV = 100 x 1.967 = 196.71
Future Value of Series of Deposits
“Annuity” : series of equal deposits at equal
intervals earning a constant rate
• The power of compounding is multiplied
– Interest on interest from principal
– AND from new contributions
• Use FV of a Series to calculate (1-3b):
– Annual deposit amount
– Table value based on amount of time and
Future Value of a Series of Deposits
Jodie Emerson has two children who will start
college in 10 years. She plans to set aside $1,500
a year for their college educations during that
period, and expects an annual interest rate of 5%
on her savings.
What amount can she expect to have available
when her children start college?
Use Future Value of a series (1-3b) to find out:
$1,500 x (12.578) = $18, 867
Using future value tables in Exhibit 1-3 to calculate FV of single deposit or series of deposits