What factor does 'r' represent in the Future Value formula?

In the Future Value formula, 'r' represents the interest rate applicable to the investment or savings account. This rate is crucial because it determines how much the initial investment will grow over time. The Future Value formula is typically expressed as FV = PV × (1 + r)^n, where PV is the present value, 'r' is the interest rate per period, and 'n' is the number of periods.

The interest rate can reflect various factors such as inflation, market conditions, and the specific terms of the financial instrument. Therefore, having a clear understanding of the interest rate allows investors and financial planners to make more informed decisions regarding the potential growth of their investments over time. Understanding this component is essential for analyzing investment opportunities and financial planning, highlighting why 'r' is a pivotal element in the Future Value calculation.