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## How do you calculate initial investment?

Write out the formula for interest, **F = P(1 + i)^n**. F is the final amount. P is your initial (or principle) investment. i is the interest rate (should be written in decimal form).

## How do you find the initial value of compound interest?

**P = A / (1 + r/n) ^{nt}**

- P = principal amount (initial investment)
- A = value after t periods.
- r = annual interest rate.
- n = number of times the interest is compounded per year.
- t = number of years the money is borrowed for.

## How do you calculate initial investment in NPV?

**What is the formula for net present value?**

- NPV = Cash flow / (1 + i)t – initial investment.
- NPV = Today’s value of the expected cash flows − Today’s value of invested cash.
- ROI = (Total benefits – total costs) / total costs.

## What is the formula of compound interest with example?

Derivation of Compound Interest Formula

Simple Interest Calculation (r = 10%) |
Compound Interest Calculation(r = 10%) |
---|---|

For 5^{th} year: P = 10,000 Time = 1 year Interest = 1000 |
For 5^{th} year: P = 14641 Time = 1 year Interest = 1464.1 |

Total Simple Interest = 5000 | Total Compount Interest = 6105.1 |

## How is investment interest calculated?

The simplest formula to use is **to subtract the original (principal) investment amount from the year-end (terminal) investment value**. For example: Terminal = R110,000; principal = R100,000; difference = R10,000. The total “interest” earned, therefore, would be R10 000.