Future Value (FV)
Future Value (FV) is a financial term that refers to the value of an asset at a specified date in the future, based on an assumed rate of return. It is used to compare the value of investments and to determine the amount of money that needs to be invested today in order to reach a certain goal in the future. Future Value is calculated by taking the present value of an asset and multiplying it by the expected rate of return over a given period of time.
History of Future Value
The concept of Future Value has been around since the 16th century, when it was used by merchants to calculate the value of goods and services in the future. In the 19th century, the concept was further developed by economists and mathematicians, who used it to calculate the value of investments and to compare different investment options. Today, Future Value is used by financial advisors, investors, and businesses to make informed decisions about their investments and to plan for their future financial goals.
Comparison Table
| Present Value | Rate of Return | Time Period | Future Value |
|---|---|---|---|
| $100 | 5% | 5 years | $127.63 |
| $200 | 7% | 10 years | $452.34 |
| $500 | 10% | 15 years | $2,068.44 |
Summary
Future Value is a financial term that refers to the value of an asset at a specified date in the future, based on an assumed rate of return. It is used to compare the value of investments and to determine the amount of money that needs to be invested today in order to reach a certain goal in the future. To calculate Future Value, the present value of an asset is multiplied by the expected rate of return over a given period of time. For more information about Future Value, visit websites such as Investopedia, The Balance, and Investing.com.
See Also
- Present Value
- Discount Rate
- Compound Interest
- Annuity
- Net Present Value
- Internal Rate of Return
- Time Value of Money
- Cash Flow
- Risk-Adjusted Return
- Return on Investment
