Future Value Calculator
Future Value (FV) represents the future equivalent amount of an investment for a specific interest rate and a number of periods the interest is compounding.
Future Value formula is:
Important notes:
- The time frame (year, month, quarter etc.) must be the same for both, 'Interest Rate' and 'Number of Time Periods';
- This model uses compound interest method;
- This model assumes that the Interest Rates stays the same.
This Future Value calculator allows you to accomplish the following:
- Determine the future equivalent amount of an investment given a specific interest rate and a number of periods the interest is compounding;
- Compare multiple scenarios, by showing each case in the results section.
Future Value calculator is part of the Time Value of Money calculators, complements of our consulting team.
Terms of use
- Complementarily, in order to calculate the Future Value, we offer a calculator free of charge.
-
You may link to this calculator from your website as long as you give proper credit to C. C. D. Consultants Inc. and there exists a visible link to our website.
To link to our Future Value calculator from your website or blog, just copy the following html code:<a href="/calculators/time-value-of-money/future-value-calculator">Future Value Calculator</a>
- Although C. C. D. Consultants Inc.'s personnel has verified and validated the Future Value calculator, C. C. D. Consultants Inc. is not responsible for any outcome derived from its use. The use of Future Value calculator is the sole responsibility of the user and the outcome is not meant to be used for legal, tax, or investment advice.
Definitions and terms used in Future Value Calculator
- Present Value
- The amount expected to be invested or paid in the beginning or principal amount.
- Interest Rate Per Period
- The rate at which the interest for the use of money is charged or paid. Usually, the interest rate is expressed as a percentage and noted on annual basis.
- Number of Time Periods
- The number of time the interest is compounded (year, month, quarter etc.) and must have the same time frame as 'Interest Rate Per Period'.
- Compound interest
- The interest that increases exponentially over time periods. The interest earning interest.
Future Value Examples
Example 1:
You invest 1,000 for 8 years. How much your investment will be worth at 7.25% annual interest rate compounded annually?
Present Value (PV) = 1,000
Interest Rate Per Period = 7.25%
Number of Time Periods = 8
Answer: Future Value = 1,750.57
If you invest 1,000 today, at a rate of 7.25 % per year compounded annually, you will receive 1,750.57 after 8 years.
Example 2:
You invest 1,000 for 8 years. How much your investment will be worth at 7.24% annual interest rate compounded quarterly?
Present Value (PV) = 1,000
Interest Rate Per Period = 7.24% / 4 = 1.81%
Number of Time Periods = 8 * 4 = 32
Answer: Future Value = 1,775.39
If you invest 1,000 today, at a rate of 7.24 % per year compounded quarterly, you will receive 1,775.39 after 8 years.
Example 3:
You invest 1,000 for 8 years. How much your investment will be worth at 7.2% annual interest rate compounded monthly?
Present Value (PV) = 1,000
Interest Rate Per Period = 7.2% / 12 = 0.6%
Number of Time Periods = 8 * 12 = 96
Answer: Future Value = 1,775.85
If you invest 1,000 today, at a rate of 7.2 % per year compounded monthly, you will receive 1,775.85 after 8 years.
These examples show the effect of compounding interest. At certain point, a lower annual interest rate compounded more often can generate higher return than a higher interest rate compounded less frequent.