Future value refers to the amount of money an investment will grow to over a period of time at a specified interest rate. This concept is crucial in evaluating potential investment opportunities, as it helps in understanding how much a current sum of money will be worth in the future, taking into account the effects of interest and time. Future value is especially important when making capital budgeting decisions, where estimating the potential returns on investments can significantly influence which projects are pursued.
congrats on reading the definition of future value. now let's actually learn it.