To calculate the future value of an investment, you can use the formula:
- Future Value (FV) = Present Value (PV) × (1 + r)^n
Where:
- FV = Future Value
- PV = Present Value (initial investment)
- r = interest rate (as a decimal)
- n = number of years
For this example, we have:
- PV = $100
- r = 10% = 0.10
- n = 2 years
Now, plugging the values into the formula:
- FV = 100 × (1 + 0.10)^2
- FV = 100 × (1.10)^2
- FV = 100 × 1.21
- FV = $121
Therefore, the future value of $100 invested today at an interest rate of 10% after two years will be $121.