Future Value of a Lump Sum Formula

Formula

FV = PV x (1 + i)n
Variables used in the formula
PV = Present Value
FV = Future Value
i = Discount rate
n = Number of periods

Use

The future value of a lump sum formula shows what a cash lump sum received today will be worth in the future.

The formula compounds the value of a lump sum at the start of period 1 (present value), forward to its value at the end of period n (future value).

Excel Function

The Excel FV function can be used instead of the future value of a lump sum formula, and has the syntax shown below.

FV(i, n, pmt, PV, type)

*The pmt and type arguments are not used when calculating the future value of a lump sum.

Future Value of a Lump Sum Formula Example

If a lump sum of 15,000 is received at the start of period 1, and the discount rate is 5%, then the value of the lump sum at the end of period 10 is given by the future value of a lump sum formula as follows:

FV = FV x (1 + i)n
FV = 15,000 x (1 + 5%)10
FV = 24,433.42

The same answer can be obtained using the future value formula in Excel as follows:

FV = -FV(i,n,,PV)
FV = -FV(5%,10,,15000)
FV = 24,433.42 

The future value of a lump sum formula is one of many used in time value of money calculations, discover another at the link below.

Future Value of a Lump Sum Formula November 6th, 2016Team

You May Also Like


Related pages


sundry meaning in accountingsimply accounting chart of accountsgrowing annuity future valuedoubtful accounts ratiojournal entries for stock dividendssum of years digits calculatortime value of money calculator excel spreadsheetcalculate irr in excelaccounting accrued expensesgeneral ledger worksheetaccrual double entrytypes of bank reconciliation statementassets equal liabilities plus equitycompany projections templateupdated cash book bank reconciliation statementfv annuity due formulaprofit markupvariable expenses examplesimprest retirement formdifference between p&l and balance sheetuncollectible accounts expense formuladepreciation straight line method formulaaccruals and deferred incomesimple trial balance examplepresent value of annuity due tabledefine notes payabledeclaration of cash dividendaccounts payable a credit or debitpresent value annuity tablespvf tablecost volume profit formulaspayroll test questions and answersreconciliation templateaccounts payable skills testaccounting adjustment entriesasset turnover ratio calculatorcost of direct materials used formulaannuity perpetuity formulaunrealised gains and losses accounting treatmentperiodic vs perpetualdaily timesheet template freeaged receivable reportinstallment noteswhat are manufacturing overheadsbank reconciliation statement explanationformat of adjusted cash bookfuture value of a growing annuityaccounts receivable process flow diagramjournal entries for provisionsimpress cashreduced balance depreciationcost volume profit formulaswhat is nsf checkwhat is factory overheadreceivables turnover ratio calculatormarginal cost formula calculatornet realisable value of inventoryprinciple of double entry bookkeepingcushions definitionaging of accounts receivable method formulacommon size balance sheet formulaaccrual entries in accountingcalculate payback period formulapayment voucher word formatfundamental accounting equation problems and solutionsproveit practice testsgearing leverage ratioassembly line workers wages are period costsbills payable meaningstatement of stockholders equity exampledebit note and credit note journal entryretained earnings debit