Future Value Calculator




Investment

What is Future Value?

Future Value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The FV calculation allows investors to predict, with varying degrees of accuracy, the amount of profit that can be generated by different investments. FV calculation is based on the assumption of a stable growth rate.

Why is Future Value important?

The future value (FV) is important to investors and financial planners as they use it to estimate how much an investment made today will be worth in the future. Knowing the future value enables investors to make sound investment decisions based on their anticipated needs

2 Ways of calculating Future Value

The FV calculation can be done in two ways depending on the type of interest being earned.

  1. Simple Interest
  2. Compound Interest

Formula for calculating Future Value

Simple Interest -

 

If an investment earns simple interest, then the Future Value (FV) formula is -

FV (Simple Interest)

where :

  • I = Investment Amount
  • R = Interest Rate
  • T = Number of years

Compound Interest -

 

The formula for the Future Value (FV) of an investment earning compounding interest is -

FV (Compound Interest)

where :

  • I = Investment Amount
  • R = Interest Rate
  • T = Number of years