It is also highly recommended for any investors, from shopkeepers to stockbrokers. This calculator is a tool for everyone who wants to make smart and quick investment calculations.
MONTHLY FINANCE CALCULATOR HOW TO
Now that you know how to compute the future value, you can try to make your calculations faster and simpler with our future value calculator. Keep reading, and we will try to explain this in details. The question that appears here is how to actually calculate this future value of one hundred dollars. Formally, economists say that the future value of money is equal to its present value increased by interest.
In fact, it will be one hundred dollars plus additional interest. Note that when you have one hundred dollars from our example, you can put it in your savings account (or make any other investment), and after a year, you will receive more than your initial payment. This concept says that one hundred dollars today is worth more than one hundred dollars tomorrow, or, more generally: money that is available now is worth more than the same amount in the future.Īre you wondering why this is? Why is the same amount of money worth more today than in the future? The answer lies in the potential earning capacity of the money that you have now. Do you prefer to get one hundred dollars today or one hundred dollars after a year from today? If your answer is one hundred today, it means that you intuitively feel the idea of the time value of money.
However, we believe that understanding it is quite simple, even for a beginning in finance. Actually, this idea is one of the core principles of financial mathematics. First of all, you need to know that the underlying assumption of future value is the concept of the time value of money. When explaining the idea of future value, it is worth to start at the very beginning.
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