Final answer:
The statement is true; the FV function calculates the future value of an investment based on periodic, constant payments and a constant interest rate.
Step-by-step explanation:
The statement given is that the FV function returns the future value of an investment based on periodic, constant payments and a constant interest rate. This statement is true. The future value (FV) is indeed calculated based on the series of equal payments (R), the periodic interest rate (i), and the number of periods (n).
For example, if you receive payments from a firm as given, with $15 million in the present, $20 million in one year, and $25 million in two years, to calculate the future value, you could use the formula:
Future Value = Principal × (1 + interest rate)time
This formula includes compound interest, where the principal is the initial amount of money, and time represents the number of periods for the investment or loan.
Real-world calculations, however, can be more complex, incorporating market interest rates and the risk of loan repayment. These factors could influence the future value and the price of financial products like bonds, which are based on the present value of future expected payments.