Future Value

 Future value (FV) is the value of a current asset at a future date based on an assumed rate of
growth.
 The future value is important to investors and financial planners, as they use it to estimate how
much an investment made today will be worth in the future.

In calculating Future Value, there are two ways to calculate it which is using the simple interest and
compound interest

Simple Interest

 an interest charge that borrowers pay lenders for a loan.

Future Value using Simple Interest

If an investment earn by simple interest then the formula of calculating the future value of money will
be FV= I x (1 + ( R x T) )

where:

I=Investment amount

R=Interest rate

T=Number of years

Example Problem

o Rodriguez Company 100,000 that is held for 5 years in savings account that has 6% simple
interest paid manually.

So the solution will be:

100,000 x (1 + (0.06 x 5))

100,000 x (1 + 3)

100,000 x 4

= 400,000

Compound Interest

 when you earn interest on both the money you've saved and the interest you earn.

Future Value using Simple Interest