Present Value (PV) is a formula used in Finance that calculates the present day value of an amount that is received at a future date. Time value of money is the concept that receiving something today is worth more than receiving the same item at a future date.
Regarding this, what is the future value of your money?
Future value is the value of an asset at a specific date. It measures the nominal future sum of money that a given sum of money is "worth" at a specified time in the future assuming a certain interest rate, or more generally, rate of return; it is the present value multiplied by the accumulation function.
Is there a formula for compound interest?
Let's look at an example. If an amount of $5,000 is deposited into a savings account at an annual interest rate of 5%, compounded monthly, the value of the investment after 10 years can be calculated as follows P = 5000. r = 5/100 = 0.05 (decimal).
How do you calculate future value in Excel?
Excel FV Function
- rate - The interest rate per period.
- nper - The total number of payment periods.
- pmt - The payment made each period. Must be entered as a negative number.
- pv - [optional] The present value of future payments. If omitted, assumed to be zero.
- type - [optional] When payments are due.