Future Value CalculatorDo you know that Future value is the value of an asset or investment as of some future date? Yes, the future value is the sum of money that an investment will be worth, assuming a certain rate of return after a specific amount of time (interest rate). Investors and financial planners emphasise future value because it enables them to predict how much an investment will be valued in the future. Show
Do you also know that there is a Future Value Calculator Online that helps us calculate the future value! Yes! Before we discuss how the future value calculator works, let us discuss what is actually meant by the future value: What is Future Value?The current asset's value at some point in the future based on an estimated rate of increase is known as a future value or FV. Investors can use the FV calculation to estimate how much profit can be made from specific assets to varying degrees of accuracy. The calculation of FV is predicated on the notion of a constant growth rate. Investors and financial planners use the future value (FV) to predict how much an investment made now will be worth. Investors can make wise investment choices based on their projected demands by knowing their future worth. Future Value FormulaThe formula for calculating the Future Value is- Future Value= Invested Amount (1+ Rate of Return) ^Number of years Isn't the formula too complicated? We also thought so! So, for such difficult calculations, Elearnmarkets has developed a Future Value Calculator Online to make the calculations easy. Future Value Calculator OnlineIn Elearnmarkets Future Value Calculator Online, we need to enter the following inputs. 1. Present Value of Investment 2. Number of years 3. Expected Annual Rate of Return After entering, click on the "Calculate Now", and we will get the amount as follows:
Future Value Calculator BenefitsBelow are the benefits of using the Future Value Calculator. With this calculator, you may find out the precise worth of the amount invested for the future. Knowing the worth of the money invested in the future allows one to increase their investment options and build up a sizable corpus over time. Now that we know what is Future Value, how it work and how to use the Future Value Calculator Online, let us discuss some FAQs about the same: What is the future value of $1000 in 5 years at 8?An investment of $1,000 made today will be worth $1,480.24 in five years at interest rate of 8% compounded semi-annually. How can I get two crores in 10 years?One of the best ways to make money is to make regular, long-term investments. You will need to invest about Rs 86,000 to amass Rs 2 crore in 10 years, assuming a 12 per cent annual return. The best way to succeed is to put money into a plan matching your risk tolerance and investment goals. What is a future value example?Future value is the amount that, with time and an interest rate, is invested now and will eventually become. As an illustration, if you deposit Rs. 1,000 today with a 2 per cent annual interest rate will be worth Rs. 1,020 after a year. Its future value is, therefore Rs. 1,020. What will Rs. 1000 be worth in 20 years?Our investor would have amassed Rs. 16,187 after ten years of adding the inflation-adjusted Rs. 1,000 every year. Not enough to truly blow anyone away. However, the account would be valued at Rs. 118,874 after 20 years of this. Created by Tomasz Jedynak, PhD and Tibor Pal, PhD candidate Reviewed by Bogna Szyk and Jack Bowater Based on research by “An Introduction to the Mathematics of Finance: A Deterministic Approach 2nd Edition“ (2013)See 1 more source Cipra T. “Financial and Insurance Formulas“ (2006) Last updated: Aug 08, 2022 This compound interest calculator is a tool to help you estimate how much money you will earn on your deposit. In order to make smart financial decisions, you need to be able to foresee the final result. That's why it's worth knowing how to calculate compound interest. The most common real-life application of the compound interest formula is a regular savings calculation. Read on to find answers to the following questions:
You may also want to check our student loan calculator where you can make a projection on your expenses and study the effect of different student loan options on your budget. Interest rate definitionIn finance, interest rate is defined as the amount charged by a lender to a borrower for the use of an asset. So, for the borrower the interest rate is the cost of the debt, while for the lender it is the rate of return. Note that in the case where you make a deposit into a bank (e.g., put money in your savings account), you have, from a financial perspective, lent money to the bank. In such a case the interest rate reflects your profit. The interest rate is commonly expressed as a percentage of the principal amount (outstanding loan or value of deposit). Usually, it is presented on an annual basis, which is known as the annual percentage yield (APY) or effective annual rate (EAR). What is the compound interest definition?Generally, compound interest is defined as interest that is earned not solely on the initial amount invested but also on any further interest. In other words, compound interest is the interest on both the initial principal and the interest which has been accumulated on this principle so far. Therefore, the fundamental characteristic of compound interest is that interest itself earns interest. This concept of adding a carrying charge makes a deposit or loan grow at a faster rate. You can use the compound interest equation to find the value of an investment after a specified period or estimate the rate you have earned when buying and selling some investments. It also allows you to answer some other questions, such as how long it will take to double your investment. We will answer these questions in the examples below. Simple vs. compound interestYou should know that simple interest is something different than the compound interest. It is calculated only on the initial sum of money. On the other hand, compound interest is the interest on the initial principal plus the interest which has been accumulated. Compounding frequencyMost financial advisors will tell you that the compound frequency is the compounding periods in a year. But if you are not sure what compounding is, this definition will be meaningless to you… To understand this term you should know that compounding frequency is an answer to the question How often is the interest added to the principal each year? In other words, compounding frequency is the time period after which the interest will be calculated on top of the initial amount. For example:
Note that the greater the compounding frequency is, the greater the final balance. However, even when the frequency is unusually high, the final value can't rise above a particular limit. To understand the math behind this, check out our natural logarithm calculator. As the main focus of the calculator is the compounding mechanism, we designed a chart where you can follow the progress of the annual interest balances visually. If you choose a higher than yearly compounding frequency, the diagram will display the resulting extra or additional part of interest gained over yearly compounding by the higher frequency. Thus, in this way, you can easily observe the real power of compounding. Compound interest formulaThe compound interest formula is an equation that lets you estimate how much you will earn with your savings account. It's quite complex because it takes into consideration not only the annual interest rate and the number of years but also the number of times the interest is compounded per year. The formula for annual compound interest is as follows:
Where:
It is worth knowing that when the compounding period is one ( How to calculate compound interestActually, you don't need to memorize the compound interest formula from the previous section to estimate the future value of your investment. In fact, you don't even need to know how to calculate compound interest! Thanks to our compound interest calculator you can do it in just a few seconds, whenever and wherever you want. (NB: Have you already tried the mobile version of our calculators?) With our smart calculator, all you need to calculate the future value of your investment is to fill the appropriate fields:
That's it! In a flash, our compound interest calculator makes all necessary computations for you and gives you the results. The two main results are:
In case you set the additional deposit field, we gave you the results for the compounded initial balance and compounded additional balance. Besides, we also show you their contribution to the total interest amount, namely, interest on the initial balance and interest on the additional deposit. Compound interest examples
The following examples are there to try and help you answer these questions. We believe that after studying them, you won't have any trouble with the understanding and practical implementation of compound interest. Example 1 – basic calculation of the value of an investmentThe first example is the simplest, in which we calculate the future value of an initial investment. Question You invest $10,000 for 10 years at the annual interest rate of 5%. The interest rate is compounded yearly. What will be the value of your investment after 10 years? Solution Firstly let’s determine what values are given, and what we need to find. We know that you are going to invest We want to calculate the amount of money you will receive from this investment, that is, we want to find the future value To count it, we need to plug in the appropriate numbers into the compound interest formula:
Answer The value of your investment after 10 years will be $16,288.95. Your profit will be Note that when doing calculations you must be very careful with your rounding. You shouldn't do too much until the very end. Otherwise, your answer may be incorrect. The accuracy is dependent on the values you are computing. For standard calculations, six digits after the decimal point should be enough. Example 2 - complex calculation of the value of an investmentIn the second example, we calculate the future value of an initial investment in which interest is compounded monthly. Question You invest $10,000 at the annual interest rate of 5%. The interest rate is compounded monthly. What will be the value of your investment after 10 years? Solution Like in the first example, we should determine the values first. The initial balance Let's plug in the appropriate numbers in the compound interest formula:
Answer The value of your investment after 10 years will be $16,470.09. Your profit will be Did you notice that this example is quite similar to the first one? Actually, the only difference is the
compounding frequency. Note that, only thanks to more frequent compounding this time you will earn $181.14 more during the same period! ( Example 3 - Calculating the interest rate of an investment using the compound interest formulaNow, let's try a different type of question that can be answered using the compound interest formula. This time, some basic algebra transformations will be required. In this example, we will consider a situation in which we know the initial balance, final balance, number of years and compounding frequency but we are asked to calculate the interest rate. This type of calculation may be applied in a situation where you want to determine the rate earned when buying and selling an asset (e.g., property) which you are using as an investment. Data and question Solution Let's try to plug this numbers in the basic compound interest formula:
So:
We can solve this equation using the following steps:
Raise both sides to the 1/6th power
Subtract 1 from both sides
Finally solve for r
Answer In this example you earned $1,000 out of the initial investment of $2,000 within the six years, meaning that your annual rate was equal to 6.9913%. As you can see this time, the formula is not very simple and requires a lot of calculations. That's why it's worth testing our compound interest calculator, which solves the same equations in an instant, saving you time and effort. Example 4 - Calculating the doubling time of an investment using the compound interest formulaHave you ever wondered how many years it will take for your investment to double its value? Besides its other capabilities, our calculator can help you to answer this question. To understand how it does it, let's take a look at the following example. Data and question You put $1,000 on your saving account. Assuming that the interest rate is equal to 4% and it is compounded yearly. Find the number of years after which the initial balance will double. Solution The given values are as follows: the initial balance Let's start with the basic compound interest equation:
Knowing that
Which could be written as
Divide both sides by P (P mustn't be 0!)
To solve for t, you need take the natural log (ln), of both sides:
So
Answer In our example it takes 18 years (18 is the nearest integer that is higher than 17.67) to double the initial investment. Have you noticed that in the above solution we didn't even need to know the initial and final balances of the investment? It is thanks to the simplification we made in the third step (Divide both sides by P).
However, when using our compound interest rate calculator, you will need to provide this information in the appropriate fields. Don't worry if you just want to find the time in which the given interest rate would double your investment, just type in any numbers (for example It is also worth knowing that exactly the same calculations may be used to compute when the investment would triple (or multiply by any number in fact). All you need to do is just use a different multiple of P in the second step of the above example. You can also do it with our calculator. Compound interest tableCompound interest tables were used everyday, before the era of calculators, personal computers, spreadsheets, and unbelievable solutions provided by Omni Calculator 😂. The tables were designed to make the financial calculations simpler and faster (yes, really…). They are included in many older financial textbooks as an appendix. Below, you can see what a compound interest table looks like. Using the data provided in the compound interest table you can calculate the final balance of your investment. All you need to know is that the column compound amount factor shows the value of the factor Note that the values from the column Present worth factor are used to compute the present value of the investment when you know its future value. Obviously, this is only a basic example of a compound interest table. In fact, they are usually much, much larger, as they contain more periods With your new knowledge of how the world of financial calculations looked before Omni Calculator, do you enjoy our tool? Why not share it with your friends? Let them know about Omni! If you want to be financially smart, you can also try our other finance calculators. Additional InformationNow that you know how to calculate compound interest, it's high time you found other applications to help you make the greatest profit from your investments: To compare bank offers which have different compounding periods, we need to calculate the Annual Percentage Yield, also called Effective Annual Rate (EAR). This value tells us how much profit we will earn within a year. The most comfortable way to figure it out is using the APY calculator, which estimates the EAR from the interest rate and compounding frequency. If you want to find out how long it would take for something to increase by n%, you can use our rule of 72 calculator. This tool enables you to check how much time you need to double your investment even quicker than the compound interest rate calculator. You may also be interested in the credit card payoff calculator, which allows you to estimate how long it will take until you are completely debt-free. Another interesting calculator is our cap rate calculator which determines the rate of return on your real estate property purchase. We also suggest you try the lease calculator which helps you determine the monthly and total payments for a lease. If you're looking to finance the purchase of a new recreational vehicle (RV), our RV loan calculator makes it simple to work out what the best deal will be for you. The depreciation calculator enables you to use three different methods to estimate how fast the value of your asset decreases over time. And finally, why not to try our dream come true calculator. Tomasz Jedynak, PhD and Tibor Pal, PhD candidate Results The final balance is $4,926.8. The total compound interest is $3,926.8. Build vs. BuyDiscounted cash flowWebsite ad revenue… 12 more What is the future value of $10000 on deposit for 5 years at 6% simple interest?The future value of $10,000 with 6 % interest after 5 years at simple interest will be $ 13,000.
What is the future value of $1000 after 5 years at 8% per year?What is the future value of $1000 after 5 years at 8% per year? If compounding monthly, $1,489.85 is the total compound interest value after five years.
How do you calculate future value?You can calculate future value with compound interest using this formula: future value = present value x (1 + interest rate)n. To calculate future value with simple interest, use this formula: future value = present value x [1 + (interest rate x time)].
What's the future value of $1500 after 5 years if the appropriate interest rate is 6.5% compounded every 6 months?Answer and Explanation: The correct answer is d) $1,116.14.
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