Future Value Calculator
| Start balance | Deposit | Interest | End balance |
|---|
FV = PV × (1 + r)n + PMT × [(1 + r)n - 1] / r (PMT at end)
FV = PV × (1 + r)n + PMT × [(1 + r)n - 1] / r × (1 + r) (PMT at beginning)
Where:
FV = Future Value
PV = Present Value
PMT = Periodic Payment
r = Interest Rate per period
n = Number of periods
Example:
PV = $1,000, PMT = $100, r = 5% annually (0.05), n = 5 years
PMT at end:
FV = 1000 × (1 + 0.05)5 + 100 × [(1 + 0.05)5 - 1] / 0.05
FV = 1000 × 1.27628 + 100 × (1.27628 - 1) / 0.05
FV = 1276.28 + 100 × 5.5256 = $1828.84
Understanding Future Value (FV)
Future Value (FV) represents how much a sum of money today will be worth at a future date, based on a specified interest rate and time period. It’s commonly used in savings accounts, investments, and bonds where compound interest plays a key role in growing your funds over time.
For example, imagine you deposit $10 in a savings account that earns 6% annual interest. After one year, your money will grow due to compounding. Using the calculator, enter $10 as the Present Value (PV), 6% as the Interest Rate (I/Y), and 1 year as the Time (N). Leave the Payment (PMT) field empty. After calculation, you’ll get an FV of $10.60, showing that your original $10 becomes $10.60 in a year.
The Importance of Time Value of Money
Future Value is a core concept in the Time Value of Money (TVM)—a principle that highlights how the value of money changes over time. FV works alongside other key terms like Present Value (PV), Interest Rate (I/Y), Number of Periods (N), and Payments (PMT). This financial foundation is essential for understanding how loans, credit cards, mortgages, and investments function.
Explore More Financial Tools
Curious about what your money is worth today instead of later? Try our [Present Value Calculator] for quick and easy comparisons.
Want to learn more about the Time Value of Money? Visit our [Finance Calculator] for helpful explanations and financial insights.
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