Future Value Calculator

What is Future Value?

The future value (FV) of an investment is the amount of money it will grow to over a specific period, considering a specified interest rate. This calculation helps investors understand the potential returns of their current savings or investments.

How to Use the Future Value Calculator?

1. Enter the initial investment amount (Present Value).
2. Provide the annual interest rate (as a percentage).
3. Enter the time period (in years).
4. Select the compounding frequency (e.g., annual, monthly).
5. Click on the Calculate button to get the future value.

Formula for Future Value

The formula to calculate the future value is:

FV = PV × (1 + r/n)^(n × t)

• FV: Future Value
• PV: Present Value (Initial Investment)
• r: Annual interest rate (decimal)
• n: Number of compounding periods per year
• t: Time period in years

Why Calculate Future Value?

Understanding the future value of your investments can help you:

• Set realistic financial goals.
• Plan for retirement or other major expenses.
• Make better investment decisions by comparing potential returns.

FAQs about Future Value

1. What is the difference between future value and present value?

Present value refers to the current worth of an investment, while future value calculates how much the investment will grow over time based on a specific interest rate.

2. How does compounding affect future value?

Compounding allows your investment to grow faster because you earn interest on both the principal and previously earned interest. The more frequent the compounding, the higher the future value.

3. Can this calculator be used for non-financial calculations?

Yes, you can use this calculator to predict growth in non-financial contexts, like population growth or resource accumulation, as long as the inputs align with the formula.