Finance Calculator Future Value

Future Value Formula:

\[ FV = PV \times (1 + r)^n + PMT \times \frac{(1 + r)^n - 1}{r} \]

Present Value (PV):

Interest Rate (r):

% per period

Number of Periods (n):

periods

Periodic Payment (PMT):

$ per period

Future Value (FV):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Future Value Calculation?

Future Value (FV) calculation determines how much a current investment or series of payments will be worth at a future date, considering compound interest and periodic contributions. It's essential for financial planning and investment analysis.

2. How Does the Calculator Work?

The calculator uses the future value formula:

\[ FV = PV \times (1 + r)^n + PMT \times \frac{(1 + r)^n - 1}{r} \]

Where:

$ FV $ — Future Value ($)
$ PV $ — Present Value or initial investment ($)
$ r $ — Interest rate per period (as decimal)
$ n $ — Number of periods
$ PMT $ — Periodic payment amount ($ per period)

Explanation: The formula calculates compound growth of initial investment plus the future value of a series of periodic payments.

3. Importance of Future Value Calculation

Details: Future value calculations are crucial for retirement planning, investment analysis, loan amortization, and understanding the time value of money. They help individuals and businesses make informed financial decisions.

4. Using the Calculator

Tips: Enter present value in dollars, interest rate as percentage per period, number of periods, and periodic payment amount. All values must be valid (PV ≥ 0, rate ≥ 0, periods > 0).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between FV with and without periodic payments?
A: Without PMT, FV only considers compound growth of initial investment. With PMT, it includes both initial investment growth and accumulated value of regular contributions.

Q2: How does compounding frequency affect future value?
A: More frequent compounding (monthly vs. annually) increases future value. Ensure the interest rate matches the compounding period.

Q3: Can this calculator handle different compounding periods?
A: This calculator assumes the interest rate period matches the payment period. For different frequencies, adjust the rate and periods accordingly.

Q4: What if my periodic payments occur at the beginning vs. end of period?
A: This formula assumes end-of-period payments. For beginning-of-period payments, multiply the PMT part by (1 + r).

Q5: How accurate are future value projections?
A: Projections assume constant interest rates and regular payments. Actual results may vary due to market fluctuations and changing contribution patterns.