In the scenario where Stacie needs to invest $3,600 today in order for her savings account to be worth $5,000 six years from now, which amount is the present value and which is fut... In the scenario where Stacie needs to invest $3,600 today in order for her savings account to be worth $5,000 six years from now, which amount is the present value and which is future value?
Understand the Problem
The question describes a scenario where Stacie invests money today and it grows to a larger amount in the future. The question asks to identify which amount is the present value and which is the future value.
Answer
$3,600 is the present value, and $5,000 is the future value.
In this scenario, $3,600 is the present value, and $5,000 is the future value.
Answer for screen readers
In this scenario, $3,600 is the present value, and $5,000 is the future value.
More Information
Present Value (PV) is the current worth of a future sum of money or stream of cash flows given a specified rate of return. Future Value (FV) is the value of an asset or investment at a specific date in the future, based on an assumed rate of growth.
Tips
A common mistake is confusing present and future values. Present value always refers to the initial investment or current worth, while future value refers to what that investment will be worth at a later date.
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