1. What is Future Value with CAGR?

Future Value (FV) with Compound Annual Growth Rate (CAGR) calculates how much an investment will grow over time at a constant annual rate of return. It's a fundamental concept in finance for projecting investment growth.

2. How Does the Calculator Work?

The calculator uses the Future Value formula:

Where:

• \( FV \) — Future Value (USD)
• \( PV \) — Present Value (USD)
• \( CAGR \) — Compound Annual Growth Rate (decimal)
• \( years \) — Investment period in years

Explanation: The formula accounts for compound growth, where each year's growth builds on the previous year's total.

3. Importance of Future Value Calculation

Details: Calculating future value helps investors understand potential returns, compare investment options, and plan for financial goals like retirement or education savings.

4. Using the Calculator

Tips: Enter present value in USD, CAGR as a percentage (e.g., 5 for 5%), and investment period in years. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between CAGR and average return?
A: CAGR shows the smooth annual growth rate that would get you from PV to FV, while average return doesn't account for compounding effects.

Q2: How accurate are CAGR projections?
A: Projections assume constant growth, which rarely happens. Actual returns may vary year to year.

Q3: Can CAGR be negative?
A: Yes, negative CAGR indicates declining value over time.

Q4: What's a good CAGR for investments?
A: This depends on asset class. Historically, stocks average 7-10%, bonds 3-5%, but past performance doesn't guarantee future results.

Q5: How does inflation affect these calculations?
A: For real (inflation-adjusted) returns, use real CAGR (nominal CAGR minus inflation rate).