Explain Net Future Worth and Project Balance Diagram?
Net future worth is future value of the current assets at some future specific date, it is calculated on the basis of some expected rate of growth.
It is very important for the investors to find the expected future worth in order to make current financial decision viable.
They have to plan how much an investment made today will worth in future. As we knows $100 today will worth different value then $100 after 3 years due to various factors, therefore for an investor it is most important to find the real worth of today’s money after a specific period of time.
Future value can be determined with the help of following formula:
Where,
FV = Future value
PV = Present value
i = rate of growth
t = time period
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