FV = Future Value

PV = Present Value

i = Interest Rate

n = Number of Years

Interest remover determines the lump sum that must be deposited in an account with a certain interest rate to achieve the desired amount after a specified period using compound interest.

In 5 years, we want to save 10,000 Eur. The interest rate is 3% p.a.

Thus:

PV = 10,000 * (1 / (1 + 0.03))^5

PV = 10,000 * (1 / 1.03)^5

PV = 10,000 * 0.8626

PV = 8,626 Eur must be deposited as a lump sum

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