1. What is Future Value Calculation?

The Future Value calculation determines how much an investment made today will grow to at a specific interest rate over a certain period, including regular additional payments. It's a fundamental concept in finance for planning investments and savings.

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 periods (years)
• \( PMT \) — Regular payment amount

Explanation: The formula accounts for both compound growth of the initial investment and the accumulated value of regular payments.

3. Importance of Future Value Calculation

Details: Understanding future value helps in financial planning, retirement savings, loan amortization, and comparing investment options.

4. Using the Calculator

Tips: Enter present value in USD, interest rate as decimal (e.g., 0.05 for 5%), time in years, and payment amount in USD. All values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between FV with and without payments?
A: Without payments, FV only considers the initial investment. With payments, it includes regular contributions to the investment.

Q2: How does compounding frequency affect results?
A: This calculator assumes annual compounding. More frequent compounding would yield slightly higher results.

Q3: When are payments assumed to be made?
A: The formula assumes payments are made at the end of each period (ordinary annuity).

Q4: Can I use this for monthly calculations?
A: For monthly, convert years to months and annual rate to monthly rate (divide by 12).

Q5: What if the interest rate is zero?
A: The calculator handles this special case by simplifying the formula to FV = PV + PMT × t.