Calculate Future Value From Present

Future Value Formula:

\[ FV = PV \times (1 + r)^t \]

Future Value (FV):

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1. What is Future Value Calculation?

The Future Value (FV) calculation determines how much an investment made today (present value) will grow to at a future date based on a specified interest rate and time period. It's a fundamental concept in finance for evaluating investment opportunities.

2. How Does the Calculator Work?

The calculator uses the Future Value formula:

\[ FV = PV \times (1 + r)^t \]

Where:

\( FV \) — Future Value
\( PV \) — Present Value (initial investment)
\( r \) — Interest rate per period (in decimal form)
\( t \) — Number of time periods (typically years)

Explanation: The formula accounts for compound interest, where interest earned each period is added to the principal for the next period's interest calculation.

3. Importance of Future Value

Details: Future Value calculations are essential for financial planning, investment analysis, retirement planning, and comparing different investment options. They help investors understand the time value of money.

4. Using the Calculator

Tips: Enter present value in USD, interest rate as a decimal (e.g., 0.05 for 5%), and time in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus accumulated interest.

Q2: How often is interest compounded in this calculator?
A: This calculator assumes annual compounding. For different compounding periods, the formula would need adjustment.

Q3: What are typical interest rate ranges?
A: Rates vary widely - savings accounts might offer 0.5-2%, bonds 2-5%, stocks historically average 7-10% annually.

Q4: Can I calculate present value from future value?
A: Yes, by rearranging the formula: \( PV = FV / (1 + r)^t \). This is called discounting.

Q5: How does inflation affect future value?
A: Future value calculations typically don't account for inflation. For real (inflation-adjusted) returns, subtract expected inflation from the interest rate.