// accounting › Wealth Management
What a present sum will be worth after n periods of compound growth.
FV = PV·(1 + r)^n
What a sum of money today will be worth at some point in the future once it has grown at a given rate. It is the core idea behind the time value of money — a dollar now is worth more than a dollar later because it can earn returns in the meantime.
PV is the present value (today's amount), r is the growth rate per period as a decimal, and n is the number of periods. Raising (1 + r) to the power n compounds the growth across every period to give FV, the future value.
Whatever matches your rate. If r is an annual rate, n is a number of years; if it is a monthly rate, n is a number of months. The key is to keep the rate and the period on the same time basis.
Two bars sit side by side: the present value on the left and the projected future value on the right. The extra height of the right-hand bar is the growth your money earns over the periods — the taller it is, the harder compounding has worked.
Saving — $5,000 at 6% for 10 years becomes about $8,954. Retirement planning — projecting what today's balance will be at 65. Comparing offers — deciding whether a lump sum now beats a larger amount promised years later, once growth is accounted for.