Future Value Calculator Uneven Cash Flow Streams

Future Value Formula for Uneven Cash Flows:

\[ FV = \sum_{t=1}^{N} CF_t \times (1 + r)^{N - t} \]

Future Value (FV):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Future Value of Uneven Cash Flows?

The future value (FV) of uneven cash flows calculates what a series of varying cash flows will be worth at a future date, given a specific interest rate. Unlike annuities with equal payments, this handles irregular income or investment patterns.

2. How Does the Calculator Work?

The calculator uses the future value formula for uneven cash flows:

\[ FV = \sum_{t=1}^{N} CF_t \times (1 + r)^{N - t} \]

Where:

\( CF_t \) — Cash flow at time period t (can be positive or negative)
\( r \) — Periodic interest rate (decimal)
\( N \) — Total number of periods
\( t \) — Time period of each cash flow

Explanation: Each cash flow is compounded forward to the end of the time horizon, accounting for the different time periods each cash flow has to grow.

3. Importance of Future Value Calculation

Details: Calculating future value of uneven cash flows is essential for investment analysis, retirement planning, and evaluating business projects with irregular cash flow patterns.

4. Using the Calculator

Tips: Enter the periodic interest rate as a percentage (e.g., 5 for 5%), the total number of periods, and all cash flows (one per line). Positive values represent inflows, negative values represent outflows.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between FV of uneven flows and annuities?
A: Annuities assume equal periodic payments, while this calculator handles varying amounts at different times.

Q2: How do I account for cash flows that occur at the beginning vs end of periods?
A: This calculator assumes end-of-period cash flows. For beginning-of-period, adjust the timing accordingly.

Q3: Can I use this for monthly cash flows?
A: Yes, but ensure the interest rate matches the period (use monthly rate for monthly cash flows).

Q4: What if my cash flows extend beyond the calculation period?
A: Only cash flows within the specified periods are included in the calculation.

Q5: How accurate is this calculation for real-world scenarios?
A: It provides a mathematical projection assuming constant rate. Actual results may vary with changing rates.