1️⃣ What is Future Value (FV)?

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

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2️⃣ Basic Future Value Formula (Single Lump Sum)

$$FV = PV(1 + r)^n$$FV=PV(1+r)n

Where:

• $FV$FV = Future Value
• $PV$PV = Present Value
• $r$r = Interest or growth rate
• $n$n = Number of years

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3️⃣ Future Value with Multiple Annual Cash Flows

If equal annual payments are made (annuity):$$FV = A \left(\frac{(1+r)^n – 1}{r}\right)$$FV=A(r(1+r)n−1​)

Where:

• $A$A = Annual amount
• $r$r = Interest rate
• $n$n = Number of years

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4️⃣ Example 1: Land Appreciation in Urban Planning

An investor buys land for ₹10,00,000.
Expected annual appreciation rate = 8%
Holding period = 5 years

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Step 1: Apply Formula

$$FV = 10,00,000 (1 + 0.08)^5$$FV=10,00,000(1+0.08)5 $$FV = 10,00,000 (1.4693)$$FV=10,00,000(1.4693) $$FV = ₹14,69,300$$FV=₹14,69,300

👉 After 5 years, the land value is approximately ₹14.69 lakh.

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5️⃣ Example 2: Commercial Property Investment

Present Investment = ₹50,00,000
Expected annual growth rate = 10%
Period = 3 years$$FV = 50,00,000 (1.10)^3$$FV=50,00,000(1.10)3 $$FV = 50,00,000 (1.331)$$FV=50,00,000(1.331) $$FV = ₹66,55,000$$FV=₹66,55,000

👉 The property value grows to ₹66.55 lakh in 3 years.

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6️⃣ Example 3: Future Value of Annual Rental Savings

A building generates annual surplus cash of ₹5,00,000.
The amount is reinvested at 7% interest.
Period = 4 years

Using annuity formula:$$FV = 5,00,000 \left(\frac{(1.07)^4 – 1}{0.07}\right)$$FV=5,00,000(0.07(1.07)4−1​) $$(1.07)^4 = 1.3108$$(1.07)4=1.3108 $$FV = 5,00,000 \left(\frac{1.3108 – 1}{0.07}\right)$$FV=5,00,000(0.071.3108−1​) $$FV = 5,00,000 \times 4.44$$FV=5,00,000×4.44 $$FV ≈ ₹22,20,000$$FV≈₹22,20,000

👉 Total accumulated value after 4 years = ₹22.2 lakh.

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7️⃣ Applications in Architecture & Urban Planning

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🔹 1. Real Estate Feasibility

• Predicting property appreciation
• Estimating resale value
• Forecasting rental growth

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🔹 2. Transit-Oriented Development (TOD)

• Estimating future land value increase
• Forecasting commercial return near metro stations

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🔹 3. Infrastructure Projects

• Estimating future toll revenue
• Predicting parking revenue growth

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🔹 4. Maintenance Fund Planning

• Planning sinking funds for building repairs
• Estimating future corpus for redevelopment

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8️⃣ Difference Between Present Value and Future Value

Future Value	Present Value
Moves money forward in time	Brings future money to present
Used for forecasting	Used for feasibility analysis
Calculates growth	Calculates discounting

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9️⃣ Importance in Planning Decisions

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

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🔟 Limitations

❌ Assumes constant growth rate
❌ Does not account for risk variations
❌ Inflation uncertainty affects accuracy
❌ Market volatility not considered

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11️⃣ Conclusion

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.