Because it is possible to earn interest income on cash that you decide to deposit in an investment or an interest-bearing account, money that you have now or receive sooner will be more valuable to you than the same… Future value refers to the value that a current amount will eventually grow into at a given interest rate over a specific period of time.

The single-period scenario is one way in which future amounts are calculated. Compounding, which is interest earned on interest, also affects the future value of money

interest — the amount of money that is paid by a borrower to a lender for the use of their money, typically calculated from an annualized rate. single-period scenario — one way in which future amounts are calculated. growth rate — the percentage increase of a specific variable within a specific time period; synonymous with interest rate in the context of the time value of money. investment — an asset or item acquired with the goal of generating financial gain through increased income or appreciation in value.