**Future Value of a Single Amount**

**Previous Lesson: Time Value of Money**

**Next Lesson: Present Value of a Single Amount**

The future value of a single amount (one time cash flow) at some future time evaluated at a given interest rate assuming that compounding take place one time in a year (annually). Two methods for calculation:

**Formula Future Value of a Single Amount**

FV_{n }= Future value of n years

PV = Present value

i = Interest rate or Compound rate

n = Number of years

FVIF = Future Value Interest Factor

**Example # 1: **

Ms Nosheen puts Rs. 10,000 in a savings account today, that pays 5% compounded annually. How much will she have in her account after ten years; by above mentioned three equations?

**Solution: **

**Future Value of Single Amount Table Download**

**Example # 2: **

Find the value of Rs. 10,000 today at the end of 10 periods at 5% per period by using scientific calculator and by Excel sheet?

**Solution: **

>> Practice Future Value of a Single Amount MCQs

**Future value of a single amount (Intra-year Compounding)**

The value of a single amount at some future time evaluated at a given interest rate assuming that compounding take place more than one time in a year (Intra-year). Interest rate reduced while periods of time increase by frequency of compounding (m) i.e. i/m and n*m. Two methods for calculation:

**Formula **

**Time Value of Money Formula Sheet Download**

FV_{n }= Future value of n years

PV = Present value

i = Interest rate or Compound rate

m = Frequency of compounding

n = Number of years

FVIF = Future Value Interest Factor

>>> Practice Future Value of a Single Amount MCQs

**Example # 3: **

Mr. Naveed purchase a 3-year, 6-percent savings certificate for Rs. 25,000. If interest is compounded semi-annually, what will be the value of the certificate when it matures by above mentioned two equations?

**Solution: **

**Future Value of Single Amount Table Download**

>> Practice Future Value of a Single Amount Quiz 1 and Quiz 2.

**References**

Financial Management: Theory and Practice, Dr Eugene F Brigham & C Micheal Ehrhardt

Fundamentals of Financial Management: Concise Edition, Brigham Houston

The Economist Guide to Financial Management, John Tennet

Financial Management: Core Concepts, Raymond M Brooks

Thank you so much

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