Suppose a relative has promised to give you $1,000 as a wedding gift the day you get engaged. assuming a constant interest rate of 10%, consider the present and future values of this gift, depending on when you become engaged.

If this 1,000$ was put into any type of account that got 10 percent interests would mean that it would gain 100 dollars every year. Determining how long you were engaged; the account could be up to 1,100$ after one year or 1,400$ after four years.