The following formula is used to calculate the Net Present Value (NPV or P as seen in the formula) of an investment that will yield a set amount after a given period. What do the A and i stand for? P = A (1 + i)^-n

Question

Quizplus · Accepted Answer

The A and i stand for future money and interest rate, respectively.
Key Takeaway: Net Present Value provides a way to calculate the present value of an investment that will yield a set amount of future money after a given period. The formula takes into account the interest rate offered on an investment. For example, an investor promised a return of $2 million in 10 years at a given interest rate can use the formula to calculate the NPV of the investment.

The Following Formula Is Used to Calculate the Net Present