Future value is the amount of money that is needed to receive a certain amount at a specified future date. For example, if you invest $10,000 for 3 years and it has an interest rate of 10%, then your future value will be $13,310.
Future value calculations are dependent on the amount of time before receiving it, the interest, and the initial or present value you put in.
Future value can be considered as the amount that will be invested plus the interest that will be earned on the investment over time. Future value calculations are used to determine how much money an investor will have in the future, based on how much they invest now. This calculation helps investors understand their risk for taking out a loan to purchase an asset which has a low opportunity cost today.
The future value of something is what it is worth now, plus any interest on that value, discounted for time. This concept can be expressed as follows: FV = PV (1 + r)n, where n is the number of periods, r is the interest rate and PV is the present value.
The future value of an investment can be calculated by taking the present cash value of the investment, adding on any anticipated earnings on that cash, and then discounting for time.
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