1.2b Future Value

Future Value

The future value of an investment is the amount of money it is expected to compound over $t$ years, $n$ times per year, at a given APR $r$. Formally,
$\text{FV}={\left(1+\frac{r}{n}\right)}^{nt}\cdot \text{PV}.$

Given multiple cashflows $C_1,\dots ,C_N$, the net future value of the cashflows is calculated by compounding each cash flow to a common future date using the appropriate interest rate, and then summing these compounded amounts. Mathematically,
$\text{NFV}={\sum }_{i=1}^{nt}{\left(1+\frac{r}{n}\right)}^{nt-i}{C}_i.$