Discounting Formula for Present Value: PV = FV/(1+i)ⁿ

Compounding Formula for Future Value: FV= PV(1+i)ⁿ

Note: When dealing with interest that is compounded in a different time period other than years, you will need to divide the interest rate by the number of periods and be sure that n specifies the correct time frame. For example, if interest is compounded monthly over a three year timeframe, then you will need to divide the interest rate by 12 to reflect a monthly interest rate and express n as 36 months (3 years x 12 months) instead of 3 years.

Twenty years ago, your grandfather deposited $800 in a savings account earning 5% annually, with interest compounded on a quarterly basis. What is that savings account worth today? What would the savings account be worth if interest were compounded monthly?