How to Calculate the Future Value of Money?

You have deposited your $10,000 into an interest-earning saving account. The annual interest rate is 8%, and it is compounded annually. So in one year, your money will equal $10,800.

Here how you calculate it:

In your case:

• FV = ?
• PV = $10,000
• r = 0.08
• N = 1

Let's think that instead of one year, you deposit your money into an interest-earning saving account for two years with the same interest rate. Let's look at what happened at the end of two years:

• FV = ?
• PV = $10,000
• r = 0.08
• N = 2