Welcome, Guest
Do you need customer support or technical assistance? Click here to submit a support ticket...

TOPIC: Future Value of Investment calculation

Future Value of Investment calculation 1 year 9 months ago #5160

  • Farid Hadj-Hamou
  • Farid Hadj-Hamou's Avatar
  • Offline
  • Junior Boarder
  • Posts: 20
  • Thank you received: 1
  • Karma: 0
Hello,

Did anyone encounter a question to calculate a future value of an investment in a PMP exam. this question I encoutered when taking PMP prep questions and I did not know how to answer.

Thank you

Farid

Future Value of Investment calculation 1 year 9 months ago #5162

  • Dawn Upperman
  • Dawn Upperman's Avatar
  • Offline
  • Expert Boarder
  • Posts: 116
  • Thank you received: 17
  • Karma: 4
Hi Farid,

I did not encounter this type of question on my PMP exam. Do you recall the entire question? If so, please provide it as it may help us assist you further. Thanks!

Future Value of Investment calculation 1 year 9 months ago #5163

  • Ahmed Amin
  • Ahmed Amin's Avatar
  • Offline
  • Moderator
  • Posts: 202
  • Thank you received: 43
  • Karma: 7
me neither, i didn't encounter such type of questions. it would be great if you share a sample question for that.
Ahmed Amin Abdullah, PMP
Community Moderator

Future Value of Investment calculation 1 year 9 months ago #5164

  • Farid Hadj-Hamou
  • Farid Hadj-Hamou's Avatar
  • Offline
  • Junior Boarder
  • Posts: 20
  • Thank you received: 1
  • Karma: 0
Here is the question

You are investing $10,000 in a project and expecting a 5% return on this investment each year for 10 years. Assuming annual coumpound interest [or rate of return) what is the future value of your investment.

a/ 10000
b/ 10500
c/ 16289
d/ 19500

Future Value of Investment calculation 1 year 9 months ago #5165

  • Dawn Upperman
  • Dawn Upperman's Avatar
  • Offline
  • Expert Boarder
  • Posts: 116
  • Thank you received: 17
  • Karma: 4
Thanks for providing the question Farid!

The question is referring to “return on investment” which is a financial management technique under the “Project Cost Management” area (chapter 7 in PMBOK 5th edition). The formula is:
fv=pv*(1+r)^n or future value=present value*(1+rate)^number of years

From questions:
present value=10,000
rate=.05
number of years=10

fv=10,000*(1+.05)^10=16,289

So I get “c” as the answer. This tells you what the value of your investment will be in 10 years at this rate.

Hope this helps!

Future Value of Investment calculation 1 year 9 months ago #5166

  • Farid Hadj-Hamou
  • Farid Hadj-Hamou's Avatar
  • Offline
  • Junior Boarder
  • Posts: 20
  • Thank you received: 1
  • Karma: 0
Thank you for the explanation!
Moderators: Yolanda Mabutas, Ahmed Amin, Scott Gillard, Michael DeCicco, Rahul Kakkar, Fernando Jr Sinlao Lim, Mary Kathrine Padua, Chris Preziotti, Lazard Toe, ITBMC, MPM, CIPM, PMP, ITIL, Christian Winter, Kevin Nason, Michael Sumaquial, PMP, Mark Wuenscher, PMP

OSP INTERNATIONAL LLC
OSP INTERNATIONAL LLC
Training for Project Management Professional (PMP)®, PMI Agile Certified Practitioner (PMI-ACP)®, and Certified Associate in Project Management (CAPM)®