Future value of single or multiple cash flows
To determine the future value of cash flows, we must apply the compounding technique. Compounding may be yearly/annually, halfyearly, quarterly, monthly etc.
Future Value of Single Cash Flow
Future value can be calculated by the following formula:
FV_{n } = PV (1 + r)_{n}
Where
FV= Future value
PV= Present value
r = Rate of Interest
n = Number of periods
Example: FV of single cash flow compounded annually
Let us compute the future value of an investment of $ 2,000 compounded annually/yearly at the rate of 12%, after 4 years period.
FV

=

$ 2,000 x (1 + 0.12) ^{4}


=

$ 3,147.04
