Example - Future Value

Background     One of the most common questions asked of financial planners is "How much money will I have in the future?" Future Value (FV) calculations with TValue provide a way to answer that question.

Facts     P. Pincher has managed to save $1,000. On July 10, 2025, he is going to deposit that money in a savings bond yielding 5%. He would like to know how much that investment will be worth in 25 years.

Needed     The balance on July 10, 2050.

Settings     This example assumes Normal amortization (Compute Method) and a Year Length of 365 days (set in the Calculations group on the Configuration ribbon).

1. Enter the cash flow information as shown below.

   ** SCREEN SHOT HERE **

2. Press [F9], [Ctrl]+[U], or click Calculate from the Compute group to compute the amount available for withdrawal.

Solution     The amount available for withdrawal on July 10, 2050 is $3,386.35.

Proof     P. Pincher is a skeptical man. He does not believe that he can more than triple his money over that time period using such a modest growth rate. He would like to see the details of the interest accruals during the time period.

1. Click on + Click here to add a new line under line 2 of the existing schedule to create a new cash flow line. Enter the cash flow information as shown below. Click OK to "...temporarily suspend date checking".

   ** SCREEN SHOT HERE **

2. Click Sort from the Rearrange group, and choose By start dates only from the drop-down list.
3. Press [F4] or click the Amortization Schedule button to display the amortization of the Withdrawal Amounts.

   You will notice that for each of the $0.00 withdrawals, TValue displays the amount of interest calculated since the last withdrawal date.