Expected returns and values for the future and now
1. When calculating the future and present value of investment, interest rates are an important consideration. The interest rate affects how fast the investment will grow or fall over time.
2. The timeframe of the investment is another factor that should be considered when computing future and present values. Higher returns are generally associated with longer time frames. However, shorter periods of time may yield less substantial returns due to compounding rates and other factors like inflation.
3. Potential investment cost: Investors should also consider opportunity costs when considering potential investments. These are the expenses incurred by deciding to forgo other possible investments in order to pursue a specific option. They should also be considered in any calculations of future and present value, as these can impact the overall return on investment.