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Future value is the worth of money invested at a known interest rate. It is calculated using the time value of money equation. $1000 today is worth more than $1000 in the future due to interest earned. The simplest formula for future value is an investment that earns simple interest.
Future value is how much a certain amount of money will be worth today in the future if invested at a known interest rate. It is calculated using the time value of the monetary equation based on current interest rates and values. Common variations are the future value of an investment that earns simple interest, an investment that earns compound interest, and an annuity.
The idea behind the future value of money is that $1,000 US dollars (USD) today is worth more than $1,000 dollars a year from now. This is because the money can be put into a savings account or other investment and will earn interest throughout the year. This is called the time value of money and is used in many investment schemes, from savings accounts and pension plans, to lottery prizes that award annual payments.
The simplest formula for a future value (FV) is an investment that earns simple interest. Present value (PV) is the amount that must be invested today. The interest rate (i) is the annual interest rate. Time
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