What is the formula for calculating Future Value?

The formula for calculating Future Value (FV) is derived from the principle of compound interest, which considers how money grows over time when invested at a certain interest rate (r) over a specific number of periods (n). The correct formula indicates that to find the future value of an investment, you start with the present value (PV) and multiply it by the growth factor of (1 + r) raised to the power of n, which reflects the number of compounding periods.

This means that as time passes, the initial amount (PV) increases not just by a linear factor but exponentially, as each period’s interest builds upon the previous period's interest. Therefore, using this formula allows for the calculation of how much an investment will be worth in the future, accounting for compounding effects.

By contrast, the other options represent different mathematical operations that do not accurately capture the growth of investment over time in this manner.