DAVID:$$So$,$ why is it important to be able to calculate the future value of some amount invested?

JENNIFER:$$First$,$ remember that the amount invested is usually called$,$ and the amount earned during the investment period is called$.$ It is important to be able to calculate a future value so that you can know in advance what a given amount of principal will be worth after earning a specified$$for a known$.$

DAVID:$$OK$,$ I understand that, and I know the amount of principal invested today can be called the$$value of the investment, whereas the amount realized after the passage of t$$period of time is called its$$value$.$ But what causes the present and future values to be different values?

JENNIFER:$$Two things cause the present and future values to be different amounts. First, the$$earned during the investment period causes the future value to be greater than, equal to$,$ or less than the present value. Second, the method used to calculate the interest earned$$that is$,$ whether the account pays$$interest$$determines the amount by which the future value differs from the present value.