## Future Value Calculator

The Future Value Calculator helps you determine how much an investment will be worth in the future, considering an initial investment, a specified annual interest rate, and the number of periods (e.g., years) the investment will be held.

This tool is essential for understanding how investments grow over time due to compound interest.

**Plain Text Formula**

Future Value = Initial Investment × (1 + Interest Rate) ^ Number of Periods

**Step-by-Step Guide with Real-Life Example**

**Step 1: Identify the Initial Investment**

Explanation: Enter the amount of money you initially invest or deposit.

Example: Let's say you invest $5,000.

**Step 2: Determine the Interest Rate**

Explanation: Enter the annual interest rate (expressed as a decimal). For example, an interest rate of 6% should be entered as 0.06.

Example: Your annual interest rate is 6%, which is 0.06 in decimal form.

**Step 3: Specify the Number of Periods**

Explanation: Enter the total number of periods (e.g., years) the money will be invested or saved.

Example: The investment period is 8 years.

**Step 4: Calculate the Future Value**

Explanation: Use the formula to calculate the future value of your investment.

Formula Application: Future Value = 5000 × (1 + 0.06) ^ 8 Future Value = 5000 × (1.593848) Future Value = 8,038.57

**Facts**

The Future Value formula assumes that interest is compounded once per period.

Compounding more frequently (e.g., monthly or quarterly) will result in a higher future value.

The longer the investment period, the greater the impact of compound interest.

**FAQ**

**What is the Future Value Calculator used for?**

The Future Value Calculator helps estimate the future worth of an investment based on the initial amount, interest rate, and investment duration.

**How do I convert an interest rate percentage into a decimal for this formula? **

Divide the percentage by 100. For example, 6% becomes 0.06.

**What if my investment compounds more frequently than annually?**

This formula assumes annual compounding. For different compounding frequencies, use the formula: Future Value = Initial Investment × (1 + (Interest Rate / n)) ^ (n × Number of Periods) where n is the number of compounding periods per year.

**Can this calculator be used for investments other than savings accounts? **

Yes, it can be used for various investments, such as stocks, bonds, or retirement accounts, as long as the interest rate and compounding details are known.

**How accurate is this calculator? **

The accuracy depends on the correctness of the input values. The formula provides a theoretical value based on the inputs given.