Breakdown
How it works
Future value answers "what will this be worth later?" A lump sum grows by (1 + r) each period; an ordinary annuity (payments at period end) grows by the annuity factor. Together they cover almost every savings question.
Formula
FV lump = PV × (1 + r)ⁿ
FV annuity = PMT × ((1 + r)ⁿ − 1) ÷ r
Total FV = sum of both
Worked example
10,000 now plus 0 payments at 5% for 10 periods → 16,289. Add 1,000 per period → +12,578 = 28,867.
Frequently asked questions
Payments at the start or end of the period?
This uses end-of-period (ordinary annuity). For start-of-period (annuity due) multiply the annuity part by (1 + r).
Excel equivalent?
=FV(rate, nper, -pmt, -pv). Excel returns a positive value when pmt and pv are entered as negatives.
How do I use monthly compounding?
Rate per period = annual ÷ 12 and periods = years × 12. For 6% over 10 years enter 0.5 and 120.