💰 Future Value Calculator
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📌 Understanding Future Value Calculation
Future value is the amount an investment will grow to over time with compounding interest. It is calculated using the formula:
- FV = PV × (1 + R / N)^(N × T)
- Where:
- PV: Present Value (initial investment)
- R: Annual Interest Rate (in decimal form)
- N: Number of compounding periods per year
- T: Time in years
📌 Example Calculations
| PV | R (%) | T (Years) | N | FV |
|---|---|---|---|---|
| 1000 | 5 | 2 | 4 | 1104.94 |
| 5000 | 4 | 3 | 12 | 5638.79 |
| 10000 | 6 | 5 | 2 | 13489.08 |
🔧 Practical Applications of Future Value Calculation
1. Investment Planning: Helps in forecasting the future value of investments.
2. Retirement Savings: Useful for estimating the growth of retirement funds.
3. Business Finance: Assists in evaluating the future value of business assets.
❓ FAQs
Q1: How do I calculate future value?
✅ Use the formula FV = PV × (1 + R / N)^(N × T)
Q2: What happens if the interest rate is zero?
✅ The future value remains the same as the present value.
Q3: Can future value decrease?
✅ No, future value only grows if the interest rate is positive.
Q4: Where is future value calculation commonly used?
✅ It is widely used in investments, savings, and financial forecasting.
Q5: Why is future value important?
✅ It helps in planning long-term investments and financial growth.