Consider this example: an investor can choose to invest $10,000 for an expected 1% return or can choose to invest $100 for an expected 700% return. Therefore, there are some limitations when comparing two projects.
Future value simply returns a final dollar value for what something will be worth in the future. When the market fails to produce that estimated return, the future value calculation from before is worthless. For example, an investor may have calculated the future value of their portfolio estimated the market would return 8% each year. This calculator can be used for Payroll Loans, Vehicle Asset Financing loans, Warehouse receipt finance loans, SME Business loans, and Corporate Loans. Because future value is based on future assumptions, the calculations are simply estimates that may not truly happen.
The other requires a $3,000 investment that will return 5% in year one, 10% in year 2, and 35% in year 3. One requires a $5,000 investment that will return 10% for the next 3 years. Let's say an investor is comparing two investment options. The rate can be fixed or linked to the prime interest rate. The percentage annual interest rate applicable to the transaction. Future value makes comparisons easier. The loan amount is the amount that will be financed by the bank and is the amount used to calculate the basic monthly instalment.For example, a homebuyer attempting to save $100,000 for a down payment can calculate how long it will take to reach this savings by using future value. Credit provided by Westpac Banking Corporation ABN 33 007 457 141 AFSL and. By combining this information, people can plan for the future as they understand their financial position. The Westpac Car Loan calculator lets you estimate repayments on a secured. A company or investor may know what they have today, and they may be able to input some assumptions about what will happen in the future.