Daily writing prompt
What bores you?
Future Value (FV) is the value of a present investment at a specific time in the future, assuming a certain rate of interest (or growth rate).
It answers:
“If I invest today, how much will it grow in the future?”
In architecture and planning, FV is used to:
Estimate future land value
Project rental income growth
Evaluate long-term infrastructure returns
Assess property appreciation
Forecast maintenance funds
FV=PV(1+r)nFV = PV(1 + r)^nFV=PV(1+r)n
Where:
FVFVFV = Future Value
PVPVPV = Present Value
rrr = Interest or growth rate
nnn = Number of years
If equal annual payments are made (annuity):FV=A((1+r)n−1r)FV = A \left(\frac{(1+r)^n – 1}{r}\right)FV=A(r(1+r)n−1)
Where:
AAA = Annual amount
rrr = Interest rate
nnn = Number of years
An investor buys land for ₹10,00,000.Expected annual appreciation rate = 8%Holding period = 5 years
Step 1: Apply Formula
FV=10,00,000(1+0.08)5FV = 10,00,000 (1 + 0.08)^5FV=10,00,000(1+0.08)5 FV=10,00,000(1.4693)FV = 10,00,000 (1.4693)FV=10,00,000(1.4693) FV=₹14,69,300FV = ₹14,69,300FV=₹14,69,300
👉 After 5 years, the land value is approximately ₹14.69 lakh.
Present Investment = ₹50,00,000Expected annual growth rate = 10%Period = 3 yearsFV=50,00,000(1.10)3FV = 50,00,000 (1.10)^3FV=50,00,000(1.10)3 FV=50,00,000(1.331)FV = 50,00,000 (1.331)FV=50,00,000(1.331) FV=₹66,55,000FV = ₹66,55,000FV=₹66,55,000
👉 The property value grows to ₹66.55 lakh in 3 years.
A building generates annual surplus cash of ₹5,00,000.The amount is reinvested at 7% interest.Period = 4 years
Using annuity formula:FV=5,00,000((1.07)4−10.07)FV = 5,00,000 \left(\frac{(1.07)^4 – 1}{0.07}\right)FV=5,00,000(0.07(1.07)4−1) (1.07)4=1.3108(1.07)^4 = 1.3108(1.07)4=1.3108 FV=5,00,000(1.3108−10.07)FV = 5,00,000 \left(\frac{1.3108 – 1}{0.07}\right)FV=5,00,000(0.071.3108−1) FV=5,00,000×4.44FV = 5,00,000 \times 4.44FV=5,00,000×4.44 FV≈₹22,20,000FV ≈ ₹22,20,000FV≈₹22,20,000
👉 Total accumulated value after 4 years = ₹22.2 lakh.
🔹 1. Real Estate Feasibility
Predicting property appreciation
Estimating resale value
Forecasting rental growth
🔹 2. Transit-Oriented Development (TOD)
Estimating future land value increase
Forecasting commercial return near metro stations
🔹 3. Infrastructure Projects
Estimating future toll revenue
Predicting parking revenue growth
🔹 4. Maintenance Fund Planning
Planning sinking funds for building repairs
Estimating future corpus for redevelopment
Future Value helps planners:
Understand long-term asset appreciation
Evaluate redevelopment timing
Plan phased investment strategies
Compare long-term financial scenarios
Estimate infrastructure revenue growth
❌ Assumes constant growth rate❌ Does not account for risk variations❌ Inflation uncertainty affects accuracy❌ Market volatility not considered
Future Value (FV) is a crucial financial tool in architecture and urban planning. It helps estimate how present investments grow over time, enabling planners and developers to forecast:
Land and property appreciation
Rental growth
Infrastructure returns
Long-term financial sustainability
Understanding FV supports better strategic decision-making in long-term urban development projects.
