Question

Can someone please explain this equation:
FV=PV(1+i)^n
Why is there an i and what does n stand for? years/months?

Answer 1

This formula calculates 'compounfd interest - that is interest which is applied time and again.

Suppose you get 10% interest applied every year.

If your 'Present Value' is for instance £100 then in 1 year its value Future Value FV) will be worth

100 * 1+0.1 (i.e. PV * (1+i) where I is interest rate in 'decimal)

After 2 years it will be worth

100 * 1.1 * 1.1

and after n years

PV * 1.1* 1.1* 1.1......n times = PV * (1+0.1)^n

so I is interest rate (in decimal0
n is number of periods of interest calculated (note - it may not be calculated 1/year - it may be more often or less...)

Answer 2

Thank, for some reason i was thinking of i like an imaginary number.

Answer 3

not in THIS case !

Good luck