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what is the future value formula for compound interest. For example assume a 1000 investment is held for five years in a savings account with 10 simple. The future value formula is used in essentially all areas of finance.
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Where FV is the future value of the asset or investment PV is the present or initial value not to be confused with PV which is calculated backwards from the FV r is the Annual interest rate not compounded not APY in decimal t is the time in years and n is the number of compounding periods per unit t. The future value formula shows how much an investment will be worth after compounding for so many years. FV is the future value meaning the amount the principal grows to after Y years.
FV is the future value meaning the amount the principal grows to after Y years.
F P 1rn F P 1 r n. A more efficient way of calculating compound interest in Excel is applying the general interest formula. Future Value PV 1 Annual Interest Rate Number of Years Lets say Bob invests 1000 for five years with an interest rate of 10. For example if the original investment amount is 2000 USD the investment rate is 4 and the investment is for ten years then the future value FV 2000 104 10 296049 USD.
