What are the different types of formulas of future values?
Future value formulas help individuals determine what a certain amount of money will be worth over a period of time. For example, investors often use these formulas to determine that investments from several options will bring the most financial return. There are many different future formulas, allowing individuals to be used for different applications. The most common types include a lump sum, payment variables for several years and calculations of the future Anuita. Each has specific use, with possible modifications to present the best possible answer from the inputs. These types of investment can be bonds, deposit certificates, money market accounts or similar items. In order to best calculate the future value of a one -time amount, the use of a financial calculator - whether physical or from the website - is the best way to achieve it. The individual simply fills in information such as the initial amount or the one -time amount, the number of years for the investment, the annual interest SAZBU and any supplements or subtraction to a lump sum over time period. The result is the future value of a one -time sum based on the data connected to the calculator.
Variable payments of future value formulas are a bit complicated. Data such as the annual interest rate and the length of the investment period are similar to a flat -rate formula. However, with variable payments, the individual must define the individual years in which the cash flows will be in the investment. A calculator with cash flow function or a multi -year entry for annual payments made in the investment is essential. Once all data is introduced, the calculator returns the future value; The reason for this formula comes from the various future values of the values applied every year on the investment.
The anality formula of the future value is similar and different from variable payouts of future value formulas. Here the individuals must define whether jSE payments made in the investment at the beginning of the year or at the end of the year. Obviously, payments made at the beginning of the year receive more interest than payments made at the end of the year. Investors must be very careful to define the correct inputs when using future value formulas for annuity. The wrong information put into the calculator can make the annuity look more attractive than it is, and create a distorted selection of investments.