Read the formula and variables
r is the rate per period, N is the matching period count and 1 + r is positive.
| Input | Meaning |
|---|---|
| PV | Value at time zero |
| FV | Value at time N |
| r | Rate per period |
| N | Number of periods |
Check a stated example
For 1,000 at 5% for two periods, FV is 1,102.5. Discounting 1,102.5 by the same factor returns 1,000.
The amounts in the example are synthetic. Keep the original precision through the calculation and round only the displayed result.
Check the domain and timing
At N = 0, the factor is one. At r = 0, timing does not change the supplied amount.
A changed date, payment pattern or quotation convention can require a different expression even when the numbers look similar. Identify those features before calculating.