Future value calculator
This future value calculator finds the future value of a single amount. By default, the calculator computes the future value of a $100 (PV) at a periodic interest rate (I/Y) of 3.5% in 12 periods (N). To calculate another future value, change at least one of Principal, Interest Rate (%), or Number of Periods fields. As values are changed, the calculator automatically updates the future value, chart, and schedule fields.
Note that the calculator assumes that the interest rate remains constant throughout the entire investment period. Also, the calculated future value is an estimation and does not take into account any fees, taxes, or other expenses that may affect the actual return on your investment.
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Schedule
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Future value
Future value refers to the value of an investment at a specific point in the future, after it has earned a specified rate of return. It is the amount of money that an investment is expected to grow to, over a period of time, assuming a certain rate of return.
Future value is an important concept in finance because it allows investors to calculate how much their investments will be worth in the future, based on the expected rate of return. This calculation can be useful for making investment decisions, setting financial goals, and planning for retirement.
The formula for calculating future value is:
FV = PV \cdot (1+r)^n
where:
- FV = future value
- PV = present value (the amount of money invested today)
- r = rate of return
- n = number of years the investment will be held
This formula assumes that the investment will earn a fixed rate of return over the entire investment period, and that the interest earned is reinvested.
Time value
Time value refers to the notion that money received in the future is worth less than the same amount of money received today. This is because money today can be invested and earn interest or returns, whereas money received in the future cannot be used for investment purposes until that future date.
Time value is closely related to future value because future value calculations take into account the time value of money. In the formula for future value, the rate of return (r) represents the time value of money. The rate of return is the compensation an investor receives for postponing consumption and investing money today, taking into account the risk of the investment.
For example, suppose an investor wants to invest $10,000 for 5 years at an annual interest rate of 5%. The future value of the investment after 5 years would be:
FV = \$10,000 \times(1+0.05)^5 = \$12,762.82
The $10,000 invested today will grow to $12,762.82 after 5 years, assuming an annual interest rate of 5%. The difference between the future value and the present value of the investment reflects the time value of money.