Finding F When Given P: F/P

If an amount of P dollars is invested at a point in time and i% is the interest rate per period, the amount will grow to a fuure amount of P+Pi=P(1+ i) by the end of one period; by the end of the second period, the amount will grow to P(1+ i)(1+ i)=P(1+ i)^2; at the end of N periods the amount will grow to F=P(1+ i)^N. The quanity (1+ i)^N is called the single payment compound amount factor.

The F/P factor converts a single cashflow or an equivalent cash flow in a year after it. Another way to think of it is, a F/P factor moves a cash flow forward in time.