1. What is Cash Flow Future Value?

The Future Value (FV) of cash flows represents the value of a series of cash flows at a specific future date, accounting for a given interest rate. It helps in evaluating investment opportunities and comparing different cash flow streams.

2. How Does the Calculator Work?

The calculator uses the Future Value formula:

Where:

• \( CF_i \) — Cash flow in period i (currency)
• \( r \) — Interest rate per period (decimal)
• \( n \) — Total number of periods
• \( i \) — Period number (1 to n)

Explanation: Each cash flow is compounded forward to the end of the evaluation period, with later cash flows receiving less compounding time.

3. Importance of Future Value Calculation

Details: Future Value calculations are essential for investment analysis, retirement planning, loan amortization, and comparing different financial scenarios.

4. Using the Calculator

Tips: Enter cash flows as comma-separated values, the interest rate as a decimal (e.g., 0.05 for 5%), and the total number of periods. All values must be valid (rate ≥ 0, periods ≥ 1).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between FV and NPV?
A: FV calculates value at a future date, while NPV calculates present value. FV compounds forward, NPV discounts backward.

Q2: How are irregular cash flows handled?
A: The calculator can handle irregular cash flows by entering the exact amounts for each period.

Q3: What if my cash flows are annual but rate is monthly?
A: Ensure rate and periods use the same time unit, or convert them to match.

Q4: Can I use this for negative cash flows?
A: Yes, enter negative values for outflows (e.g., -100 for a payment).

Q5: How does compounding frequency affect results?
A: The calculator assumes cash flows occur at the end of each period. For different timing, adjust the formula accordingly.