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Accounting

Why future value is important to calculate?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 12Q: What is future value and what is one example where it might be used?

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Why future value is important to calculate?

Expert Solution

Summary Introduction:

Future value is the value of what a certain asset/cash/instrument will be worth at a future specified date due to the interest rate earned over time.

It is calculated using the following formula -

FV = PV(1 + r) ^n

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