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's a fundamental concept in finance that helps in investment planning and decision making.

2. How Does the Calculator Work?

The calculator uses the Future Value formula:

Where:

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

Explanation: The formula accounts for compound interest, where interest is earned on both the initial principal and the accumulated interest.

3. Importance of Future Value Calculation

Details: Future Value calculations are essential 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 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: While mathematically possible, this calculator is designed for positive rates only as negative rates require different financial considerations.

Q4: What's the rule of 72?
A: A quick way to estimate doubling time: divide 72 by the interest rate (as percentage) to get approximate years needed to double investment.

Q5: How accurate is this calculator for real-world investments?
A: It provides theoretical results assuming constant rate; actual investments may have variable rates, fees, or other factors affecting returns.