This future value calculator forecasts the FV of a present value/deposit or investment over a specific period of time, with or without annuity payments (ordinary / due). There is in depth information about this indicator below the tool.
How does this future value calculator work?
This financial tool might come in handy when trying to determine whether an investment or deposit with or without annuity payments is profitable or not by forecasting the total outcome at the end of a certain term. The variables that are taken into consideration are:
- Present value (PV) which represents the starting principal to deposit or the starting investment cost;
- Time periods (t) is the term in years you plan to keep your investment;
- Interest rate (r) is the return rate you assume the business or deposit will generate;
- Annuity payment is the PMT made year by year during the desired time frame.
- The moment when the annuity is paid that can be either at the end (T = 0 - ordinary annuity) or at the beginning of each compounding period (T = 1 - due annuity).
The algorithm behind this future value calculator uses these 2 formulas:
PV formula used to determine the present value of the future value that results:
The information displayed consist of the following details:
Future Value (FV).
Present Value of the future value (PV).
Total principal saved/invested
Number of compounding periods.
Example of a calculation
An investor analyses the opportunity of an investment that requires an initial deposit of $100,000 and annual payments of $10,000 made over the next 10 years at the beginning of each year. What will be the figures of this investment at the end in case the rate of return is expected to be 11%?
■ Future Value (FV): $469,556.40
■ Present Value of the future value (PV): $165,370.48
■ Total principal saved: $200,000.00
■ Total interest earned: $269,556.40
■ Number of compounding periods (N): 10.00
■ Initial investment: $100,000.00
■ Annuity Payment (PMT): $10,000.0007 Apr, 2015 | 0 comments