Calculating the future value of $5,000 over the next 5 years allows you to see how much your principal will grow based on the compounding interest.
So if you want to save $5,000 for 5 years, you would want to know approximately how much that investment would be worth at the end of the period.
To do this, we can use the future value formula below:
$$FV = PV \times (1 + r)^{n}$$
We already have two of the three required variables to calculate this:
- Present Value (FV): This is the original $5,000 to be invested
- n: This is the number of periods, which is 5 years
The final variable we need to do this calculation is r, which is the rate of return for the investment. With some investments, the interest rate might be given up front, while others could depend on performance (at which point you might want to look at a range of future values to assess whether the investment is a good option).
In the table below, we have calculated the future value (FV) of $5,000 over 5 years for expected rates of return from 2% to 30%.
The table below shows the present value (PV) of $5,000 in 5 years for interest rates from 2% to 30%.
As you will see, the future value of $5,000 over 5 years can range from $5,520.40 to $18,564.65.
| Discount Rate | Present Value | Future Value |
|---|---|---|
| 2% | $5,000 | $5,520.40 |
| 3% | $5,000 | $5,796.37 |
| 4% | $5,000 | $6,083.26 |
| 5% | $5,000 | $6,381.41 |
| 6% | $5,000 | $6,691.13 |
| 7% | $5,000 | $7,012.76 |
| 8% | $5,000 | $7,346.64 |
| 9% | $5,000 | $7,693.12 |
| 10% | $5,000 | $8,052.55 |
| 11% | $5,000 | $8,425.29 |
| 12% | $5,000 | $8,811.71 |
| 13% | $5,000 | $9,212.18 |
| 14% | $5,000 | $9,627.07 |
| 15% | $5,000 | $10,056.79 |
| 16% | $5,000 | $10,501.71 |
| 17% | $5,000 | $10,962.24 |
| 18% | $5,000 | $11,438.79 |
| 19% | $5,000 | $11,931.77 |
| 20% | $5,000 | $12,441.60 |
| 21% | $5,000 | $12,968.71 |
| 22% | $5,000 | $13,513.54 |
| 23% | $5,000 | $14,076.53 |
| 24% | $5,000 | $14,658.13 |
| 25% | $5,000 | $15,258.79 |
| 26% | $5,000 | $15,878.98 |
| 27% | $5,000 | $16,519.18 |
| 28% | $5,000 | $17,179.87 |
| 29% | $5,000 | $17,861.53 |
| 30% | $5,000 | $18,564.65 |
This is the most commonly used FV formula which calculates the compound interest on the new balance at the end of the period. Some investments will add interest at the beginning of the new period, while some might have continuous compounding, which again would require a slightly different formula.
Hopefully this article has helped you to understand how to make future value calculations yourself. You can also use our quick future value calculator for specific numbers.
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