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Future Value Formula:
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The Future Value Calculator calculates the future value of an investment using compound interest formula. It helps determine how much an investment will grow over time with regular compounding periods.
The calculator uses the compound interest formula:
Where:
Explanation: The formula calculates how much an initial investment will grow when interest is compounded multiple times per year over a specified period.
Details: Future value calculations are essential for financial planning, investment decisions, retirement planning, and understanding the power of compound interest over time.
Tips: Enter the principal amount in ZAR, annual interest rate as a decimal (e.g., 0.05 for 5%), number of compounding periods per year, and time in years. All values must be positive.
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 both principal and accumulated interest.
Q2: How does compounding frequency affect future value?
A: More frequent compounding (e.g., monthly vs. annually) results in higher future value due to interest being calculated more often.
Q3: What are common compounding periods?
A: Common periods include annually (1), semi-annually (2), quarterly (4), monthly (12), and daily (365).
Q4: Can this calculator be used for loans?
A: Yes, the same formula applies to savings investments and loan calculations where interest compounds.
Q5: How accurate is this calculation for real-world scenarios?
A: This provides a mathematical estimate. Real-world results may vary due to fees, tax implications, and fluctuating interest rates.