A future value calculator is a critical business tool. You'll need to know how to calculate future value when you want to know the value of an asset (such as an investment) at a specific date in the future. Usually, you'll calculate future value when you want to know how much an investment will pay off. The future value formula includes the asset's present value, the interest rate per a specific time period, and the number of time periods between now and the future date.
The formula for future value
If you want to know how to calculate future value on your own, the formula is the same for any asset:
future_value = present_value * (1 + interest_rate / compound_frequency)^(compound_frequency * years). If you don't know all the values in this equation, feel free to use our present value calculator to assess your investment's value at the present moment, and our compound annual growth rate (CAGR) calculator to be sure you plug in the correct interest rate. Usually, the time period will be one year as interest rates are often calculated annually.
Why & how to calculate future value
It's important to know how to calculate future value if you're a business owner, or indeed any owner of appreciable assets. Once you know how valuable your assets currently are, (see our present value calculator), it's important to know how valuable they will be at any given point in the future. That way, you can plan more intelligently for what's to come. It's important to use a future value calculator in order to get around the problem of the fluctuating value of money. Ultimately, money is our way to assign a number to value. That's why understanding how to calculate the core value of assets, in the present and in the future, is so crucial.
Other important value calculations
Future value calculations are tied closely with other formulas, such as those used in our savings calculator, or an investment calculator. For example, if you have set of incoming cash flows (a.k.a. an annuity) that you expect in the future, the calculation will be different. Click through to our future value of annuity calculator to learn more. The main difference is that the future value of annuity refers to liquid cash, whereas the future value formula is used to calculate the value of an asset, regardless of whether that asset will lock up that value until being sold.