Compounding and Your Return CalculatorHow interest is calculated can greatly affect your savings. The more often interest is compounded, or added to your account, the more you earn. This calculator demonstrates how compounding can affect your savings, and how interest on your interest really adds up! Show
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues. Recommended textbook solutions Algebra and Trigonometry5th EditionRobert F. Blitzer 10,851 solutions Mathematics with Business Applications6th EditionMcGraw-Hill Education 3,760 solutions
Probability and Statistics for Engineers and Scientists9th EditionKeying E. Ye, Raymond H. Myers, Ronald E. Walpole, Sharon L. Myers 1,204 solutions
Complex Variables and Applications9th EditionJames Ward Brown, Ruel Churchill 589 solutions Calculator UseCalculate the future value return for a present value lump sum investment, or a one time investment, based on a constant interest rate per period and compounding. To include an annuity use a comprehensive future value calculation. Periodcommonly a period will be a year but it can be any time interval you want as long as all inputs are consistent.Investment (PV)is the present value or principal amount to be invested.Interest Rate (R)is the annual nominal interest rate or "stated rate" in percent. r = R/100, the interest rate in decimalNumber of Periods (t)commonly this will be number of years but periods can be any time unit. Enter whole numbers or use decimals for partial periods such as months for example, 7.5 years is 7 yr 6 mo.Compounding (m)is the number of times compounding occurs per period. If a period is a year then annually=1, quarterly=4, monthly=12, daily = 365, etc.Continuous Compoundingis when the frequency of compounding (m) is increased up to infinity. Enter c, C or Continuous for m.Interest Rate (i)i = (r/m); interest rate per compounding period.Total Number of Periods (n)n = mt; is the total number of compounding periods for the life of the investment.Future Value (FV)the calculated future value of our investmentFVIFFuture Value Interest Factor that accounts for your input Number of Periods, Interest Rate and Compounding Frequency and can now be applied to other present value amounts to find the future value under the same conditions.Future Value Formula for a Present Value:\( FV = PV\left(1+\frac{r}{m}\right)^{mt} \) where r=R/100 and is generally applied with r as the yearly interest rate, t the number of years and m the number of compounding intervals per year. Although, we can think of r as a rate per period, t the number of periods and m the compounding intervals per period where a period is any interval of time. We can reduce this to the more general \( FV = PV(1+i)^n \) where i=r/m and n=mt with i the rate per compounding period and n the number of compounding periods. When m approaches infinity, m → ∞ (continuous compounding) \( FV = PVe^{rt} \) Future Value Formula Derivations Example Future Value Calculations for a Lump Sum Investment: You put $10,000 into an ivestment account earning 6.25% per year compounded monthly. You want to know the value of your investment in 2 years or, the future value of your account.
\( FV = \$10,000(1+\frac{0.0625}{12})^{12\times2}= \$11,327.81 \) What is the future value of $1690 in 16 years assuming an interest rate of 8 percent compounded semiannually?Answer and Explanation: The future value is $5,928.62.
What is the future value of $1500 after 5 years if the annual interest rate is 6% compounded semiannually?The correct answer is d) $1,116.14.
What is the future value of $1000 after six months earning 12% annually?Correct Answer: Option C) $1,058.30.
What is the future value of 875 six years from now if the required rate of return is 7?This is a formula for finding the future value. Now this is 875 times. This is 1 plus 7 percent, which is but 7 divided by 100 point, and this is but 6 this will comes out to this is equal to 875 and this value is equal to 1.5007305.
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What is the future value of $5,500 in 17 years at an APR of 8.4 percent compounded semiannually
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