Based on the formula above, let's look at an example future value calculation.

Let's say you have two choices for investing $1000. Which one is better after one year?

#### First Investment Option

You can choose an investment that returns 7% per year, compounded monthly.

#### Second Investment Option

Or, you can select an investment that returns 6% per year, compounded daily.

### Analysis

In the first case, you want to take:

$1000 x (1 + (.07/12)) ^{12}

$1000 x (1 + .0058) ^{12}

= 1071.86

The future value after one year is __$1071.86__.

The second investment is:

$1000 x (1 + (.06/365)) ^{365}

$1000 x (1 + .00016) ^{365}

= 1060.13

The future value after one year is __$1060.13__.

**As a result, the first investment is a better choice.**

As you can see, knowing the future value helps you make more informed choices with your money.