Future Value, Single Amount
Read this section that discusses four separate but related concepts. They include: (1) multiperiod investment, (2) approaches to calculating future value, and (3) singleperiod investment. How are these topics used in the business world? Applying these concepts is helpful when comparing alternative investments and when scarce capital resources are available. Often in a business setting, limited capital resources are available. Therefore, deciding which investment is best depends on comparing which investments will bring the highest returns to the business.
SinglePeriod Investment
Since the number of periods ( or ) is one, , where is the interest rate.
LEARNING OBJECTIVE

Calculate the future value of a singleperiod investment
KEY TAKEAWAYS
Key Points
 Singleperiod investments use a specified way of calculating future and present value.
 Singleperiod investments take place over one period (usually one year).
 In a singleperiod investment, you only need to know two of the three variables , , and . The number of periods is implied as one since it is a singleperiod.
Key Terms
 Multiperiod investment: An investment that takes place over more than one periods.
 Periods ( or ): Units of time. Usually one year.
 Singleperiod investment: An investment that takes place over one period, usually one year.
EXAMPLE
The amount of time between the present and future is called the number of periods. A period is a general block of time. Usually, a period is one year. The number of periods can be represented as either or .
Suppose you're making an investment, such as depositing your money in a bank. If you plan on leaving the money there for one year, you're making a singleperiod investment. Any investment for more than one year is called a multiperiod investment.
Let's go through an example of a singleperiod investment. As you know, if you know three of the following four values, you can solve for the fourth:
 Present Value ()
 Future Value ()
 Interest Rate ( or ) [Note: for all formulas, express interest in it's decimal form, not as a whole number. 7% is .07, 12% is .12, and so on. ]
 Number of Periods ( or )
In a singleperiod, there is only one formula you need to know: . The full formulas, which we will be addressing later, are as follows:
We will address these later, but note that when both formulas become .
For example, suppose you deposit $100 into a bank account that pays 3% interest. What is the balance in your account after one year?
In this case, your is $100 and your interest is 3%. You want to know the value of your investment in the future, so you're solving for . Since this is a singleperiod investment, (or ) is 1. Plugging the numbers into the formula, you get so so . Your balance will be $103 in one year.
Source: Boundless
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