1. What is Future Value?

Future Value (FV) is the value of a current asset at a future date based on an assumed rate of growth. It helps investors understand how much an investment made today will grow to in the future.

2. How Does the Calculator Work?

The calculator uses the Future Value formula:

Where:

• \( FV \) — Future Value
• \( PV \) — Present Value or initial investment
• \( r \) — Interest rate per period (in decimal)
• \( t \) — Number of time periods (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 Calculation

Details: Future Value calculations are crucial for financial planning, investment analysis, retirement planning, and comparing different investment opportunities.

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 does compounding frequency affect future value?
A: More frequent compounding (monthly vs. annually) results in higher future values due to interest being calculated on interest more often.

Q3: Can this calculator handle negative interest rates?
A: The current implementation assumes non-negative interest rates. Negative rates would require a different financial model.

Q4: What's the rule of 72?
A: It's a quick way to estimate how long an investment will take to double: 72 divided by the interest rate gives approximate years.

Q5: How accurate is this calculator for long-term predictions?
A: While mathematically accurate, real-world results may vary due to changing interest rates, inflation, and other economic factors.