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Encyclopædia Britannica, Inc.
Future value (FV) is the estimated value of a current asset at a specified future date, based on the interest rate of investment and inflation. The future value of a given sum of money includes the present value in addition to any earnings generated from compounding interest rates. Inflation can decrease the future value in “real” terms, as rising inflation decreases the effective rate of return for an investment. Given the present value (PV) of an asset, its future value can be calculated using the following formula:
Where PV is the present value of the asset, r is the rate of return or interest rate, and n is the number of investment periods (usually years).
For example, if you invest $1,000 in a five-year certificate of deposit (CD) that pays 5%, compounded annually, the future value of that $1,000 is $1,276.28.
Learn more about compounding, the time value of money, and a future value calculator.
