framtíðargildi

Framtíðargildi refers to the concept of the value of money or an asset in the future. It is a fundamental principle in finance and economics that recognizes that money available today is worth more than the same amount of money in the future. This is due to several factors, including the potential for earning interest or returns on investments, the erosion of purchasing power due to inflation, and the inherent preference for immediate gratification.

The calculation of future value is crucial for making informed financial decisions. For instance, when evaluating an investment, understanding its projected future value helps determine its profitability. Similarly, when planning for retirement or other long-term financial goals, individuals need to estimate the future value of their savings to ensure they will meet their objectives.

The formula for calculating future value typically involves the present value of the money, the interest rate or rate of return, and the number of periods over which the money will grow. The compound interest, where interest earned also earns interest, is a key driver of future value growth over time. Different formulas exist depending on whether the compounding occurs annually, semi-annually, or more frequently. This concept is also applied in areas such as loan amortization and the valuation of future cash flows from a business.