function calculateFutureValue() {
// Reset errors
document.getElementById('pvError').style.display = 'none';
document.getElementById('rateError').style.display = 'none';
document.getElementById('timeError').style.display = 'none';
document.getElementById('resultDisplay').style.display = 'none';
// Get inputs
var pvInput = document.getElementById('presentValue');
var rateInput = document.getElementById('discountRate');
var timeInput = document.getElementById('timeHorizon');
var compInput = document.getElementById('compounding');
var pv = parseFloat(pvInput.value);
var rate = parseFloat(rateInput.value);
var time = parseFloat(timeInput.value);
var comp = parseInt(compInput.value);
var hasError = false;
// Validation
if (isNaN(pv) || pv < 0) {
document.getElementById('pvError').style.display = 'block';
hasError = true;
}
if (isNaN(rate)) {
document.getElementById('rateError').style.display = 'block';
hasError = true;
}
if (isNaN(time) || time < 0) {
document.getElementById('timeError').style.display = 'block';
hasError = true;
}
if (hasError) return;
// Calculation Logic
// Formula: FV = PV * (1 + r/n)^(n*t)
// Here, rate is in percent, so divide by 100 first
// comp is frequency (n in standard textbooks), time is years (t)
var decimalRate = rate / 100;
var base = 1 + (decimalRate / comp);
var exponent = comp * time;
var futureValue = pv * Math.pow(base, exponent);
var totalGrowth = futureValue – pv;
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2,
maximumFractionDigits: 2
});
// Update UI
document.getElementById('displayPV').innerHTML = formatter.format(pv);
document.getElementById('displayGrowth').innerHTML = "+" + formatter.format(totalGrowth);
document.getElementById('displayFV').innerHTML = formatter.format(futureValue);
document.getElementById('resultDisplay').style.display = 'block';
}
Understanding Future Value and Discount Rates
The Future Value (FV) represents the value of a current asset at a specific date in the future based on an assumed rate of growth. While the term "Discount Rate" is typically associated with calculating Present Value (discounting future cash flows back to today), in the context of Future Value calculations, this rate acts as the compounding interest rate or the expected rate of return.
The Relationship Between PV, FV, and Discount Rate
The core concept behind this calculator is the Time Value of Money (TVM). Money available today is worth more than the same amount in the future due to its potential earning capacity.
Present Value (PV): The current value of a future sum of money or stream of cash flows given a specified rate of return.
Discount Rate (r): The interest rate used in discounted cash flow analysis to determine the present value of future cash flows. When reversing the process to find Future Value, this is the rate at which your money grows.
Time Period (n): The duration for which the money is invested.
The Future Value Formula
To calculate the Future Value using a specific discount rate (compounded), the formula is:
FV = PV × (1 + r/k)n×k
Where:
FV = Future Value
PV = Present Value (Starting Amount)
r = Annual Discount Rate (in decimal form)
k = Number of compounding periods per year
n = Number of years
Why Use a Discount Rate for Future Value?
Investors often use a "Discount Rate" as a hurdle rate or required rate of return. If you want to know if an investment is worthwhile, you might ask: "If I invest $10,000 today at my required discount rate of 8%, what should it be worth in 10 years?" This calculator answers that question. It helps project the target value required to justify the risk associated with that specific discount rate.
Example Calculation
Suppose you have a Present Value of $5,000 and you apply a Discount Rate (Expected Return) of 6% compounded annually for 5 years.