Future Value - FV

Future Value - FV

The value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today. There are two ways to calculate FV:

1) For an asset with simple annual interest: = Original Investment x (1+(interest rate*number of years))

2) For an asset with interest compounded annually: = Original Investment x ((1+interest rate)^number of years)

Notes:

Consider the following examples:

1) $1000 invested for 5 years with simple annual interest of 10% would have a future value of $1,500.00.

2) $1000 invested for 5 years at 10%, compounded annually has a future value of $1,610.51.

See also: Compound, Present Value, Time Value of Money