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) Investopedia Says:
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. Related Terms:
Compound
Present Value
Revaluation Reserve
Time Value of Money |