How to Calculate FVIF on CASIO Calculator in 10 Seconds
How to Calculate FVIF?
In this article, you will get to know how to calculate the ‘Future Value Interest Factor – FVIF’
Future Value of Interest Factor (FVIF): It is a factor that is used to find the future value of an amount at a certain point in the future. Usually, you can find the FVIF values in the readymade table available online on one click. But you must know, how you can yourself calculate those values with the help of calculator itself.
In simple words, this factor helps us to determine the compounding effect of a single cash flow as well as multiple cash flows (that occur at regular time intervals) in the future & is based on the concept of time value of money.
Future Value of Interest Factor takes into consideration of the compounding effect of money that states that if interest rate > ‘0’, the value of money always appreciates over the period of time. Therefore, FVIF > ‘1’.
Compounded Value: While it is important to calculate the compounded values, you must also understand what is it exactly you are calculating too. Compounded Value is the future value of an amount of a given present value.
Example: The compounded value factor formula is a concept of time value of money which works on the concept that an amount (Rs. 100) today is worth more if it is received at a future date. i.e the amount received today can be invested & will receive earnings on it, say @12% rate of interest. Then, after a year, the amount you are supposed to receive (after 1 year) will be = Rs. 100 + Rs. (100 * 0.12) = Rs. 100 + 12 = Rs. 112.00.
After 2 years it will be = Rs. 100 + 100*0.12 + (100 + 100*0.12) * 0.12 = Rs. 100 + 12 + 13.14 = Rs. 125.44
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Calculating FVIF on Casio Calculator
Suppose, we have to Calculate FVIF @15% for 5th year:
- First, convert the Interest Rate into decimal part i.e 15/100 = 0.15
- Add 1 to it = 0.15 + 1 = 1.15
- Now, you need to enter ‘1.15’ and press ‘X’ twice.
- Now, press ‘=’ 4 times i.e (5-1).
- You will get the answer (FVIF) = 2.01135
So, if you were to invest Rs. 15,000.00 at 15% for 5 years which were compounded annually, the future amount would be Rs. 15000*2.01135 = Rs. 30170.35