Future Value Calculator is a finance tool used to calculate the value of a cash flow at a later date than originally received using a constant interest rate. This idea that an amount today is worth a different amount than at a future time is based on the time value of money
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Future value (FV) is the value of a current asset at a specified date in the future based on an assumed rate of growth.
Importance of Future Value
The future value formula is essentially used in various areas of finance. IT also allows investors to account for recurring deposits, annual interest rates, and taxes. This formula can be incorporated into other formulas.
Formula
FV = PV * [(1 + R)T]
Where:-
FV = Future value of your goal
PV = Present value or current cost of your goal
r = annual rate of inflation
T = time left to reach your goals (in years)
Example
If a sum of $1,000 invested for 5 years in a savings account. That is having 10% compounding interest rate. Then according to the formula, the future value will be:-
Compute PVIF or present value interest factor, used to determine the future discounted rate of a selected value as well as the current value of a particular series for a set number of periods
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