The formula used to calculate the future value of a present amount today, is as follows:
Where:
FV = Future Value
PV = Present Value
r = interest rate
t = time
Assume you have a present value (PV) of $1,000, growing at a rate (r) of 7.00% for ten years (t), the future value would be calculated as follows:
Using Excel, we can model the amount of interest that is credited at the end of each year:
| Year | Present Value | rate | interest | Future Value |
| 1 | $ 1,000.00 | 7.00% | $ 70.00 | $ 1,070.00 |
| 2 | $ 1,070.00 | 7.00% | $ 74.90 | $ 1,144.90 |
| 3 | $ 1,144.90 | 7.00% | $ 80.14 | $ 1,225.04 |
| 4 | $ 1,225.04 | 7.00% | $ 85.75 | $ 1,310.80 |
| 5 | $ 1,310.80 | 7.00% | $ 91.76 | $ 1,402.55 |
| 6 | $ 1,402.55 | 7.00% | $ 98.18 | $ 1,500.73 |
| 7 | $ 1,500.73 | 7.00% | $ 105.05 | $ 1,605.78 |
| 8 | $ 1,605.78 | 7.00% | $ 112.40 | $ 1,718.19 |
| 9 | $ 1,718.19 | 7.00% | $ 120.27 | $ 1,838.46 |
| 10 | $ 1,838.46 | 7.00% | $ 128.69 | $ 1,967.15 |
The data can be represented visually as well:
As you can see, the amount of interest credited at the end of each year grows on an exponential basis.
Using an HP12C, the future value can be calculated using the following keystrokes:
[1000][PV]
[10][n]
[7][i]
[FV]
A copy of the Excel model used to calculate future value can be found here.