Overview:
- Future value of money is the value of a sum of money invested now seen at a future date.
- Furture value can also be calculated for a series of cash flows that will happen over a period of time (starting from now).
- The numpy.fv() function calculates the Future Value of an investment with additional periodic payments made towards the investment.
- The numpy.fv() compounds the interest as specified by a compounding frequency. For example, if the compounding frequency is four it means the interest is calculated every quarter using compound interest.
- The function also supports calculation of future values of payments where the due is during the beginning (i.e., annuity) of or end of each period.
Example 1: Payment Due at the end of each period
|
import numpy as np
initialInvestment = 500; # Initial investment interestRate = 0.05; # Annual rate of interest compoundingFrequency = 4; # The interest is compounded every 3 months quarterlyPayment = 100; # Payment towards investment numberOfYears = 10; # Future value of total investment upon expiry of this period
futureValue = np.fv(interestRate/compoundingFrequency, numberOfYears * compoundingFrequency, -quarterlyPayment, -initialInvestment);
print("Initial Investment:%5.2f"%initialInvestment); print("Interest Rate:%2.2f"%interestRate); print("Compounding Frequency:%d"%compoundingFrequency); print("Investment on every quarter:%5.2f"%quarterlyPayment); print("Investment period in years:%d"%numberOfYears); print("Value of Investment upon expirty of %d years:%10.2f"%(numberOfYears,futureValue));
|
Output:
|
Initial Investment:500.00 Interest Rate:0.05 Compounding Frequency:4 Investment on every quarter:100.00 Investment period in years:10 Value of Investment upon expirty of 10 years: 5970.77 |
Example 2: Payment Due at the beginning of each period
|
import numpy as np
initialInvestment = 1000; # Initial investment interestRate = 0.04; # Annual rate of interest compoundingFrequency = 12; # The interest is compounded every 3 months quarterlyPayment = 100; # Payment towards investment numberOfYears = 5; # Future value of total investment upon expiry of this period
futureValue = np.fv(interestRate/compoundingFrequency, numberOfYears * compoundingFrequency, -quarterlyPayment, -initialInvestment,when='begin');
print("Initial Investment:%5.2f"%initialInvestment); print("Interest Rate:%2.2f"%interestRate); print("Compounding Frequency:%d"%compoundingFrequency); print("Invsetment on every quarter:%5.2f"%quarterlyPayment); print("Investmemt period in years:%d"%numberOfYears); print("Value of Investmemt upon expirty of %d years:%10.2f"%(numberOfYears,futureValue)); |
Output:
|
Initial Investment:1000.00 Interest Rate:0.04 Compounding Frequency:12 Invsetment on every quarter:100.00 Investmemt period in years:5 Value of Investmemt upon expirty of 5 years: 7872.99 |