1. What is the Future Value Formula?

The Future Value formula calculates how much a current investment will grow over time with compound interest and regular contributions. It's commonly used for government savings plans and retirement calculations.

2. How Does the Calculator Work?

The calculator uses the Future Value formula:

Where:

• \( FV \) — Future Value (USD)
• \( PV \) — Present Value (USD)
• \( r \) — Interest rate per period (decimal)
• \( n \) — Number of periods (unitless)
• \( PMT \) — Periodic payment (USD)

Explanation: The first part calculates growth of initial investment, the second part calculates future value of regular contributions.

3. Importance of Future Value Calculation

Details: Understanding future value helps in financial planning, retirement savings, and comparing different investment options. Government savings programs often use this calculation.

4. Using the Calculator

Tips: Enter present value in USD, interest rate as decimal (e.g., 0.05 for 5%), number of periods, and periodic payment in USD. All values must be valid (non-negative).

5. Frequently Asked Questions (FAQ)

Q1: How often should periods be for accurate calculation?
A: The period should match the compounding frequency (e.g., monthly periods for monthly compounding).

Q2: What's the difference between FV and PV?
A: PV is the current value, FV is what that amount will grow to in the future with interest.

Q3: How does the periodic payment affect results?
A: Regular contributions significantly increase future value through compound interest.

Q4: What's a typical government savings rate?
A: Government bonds typically offer 1-5% annual returns, depending on term and economic conditions.

Q5: Can this be used for inflation-adjusted calculations?
A: For real returns, use an inflation-adjusted interest rate (nominal rate minus inflation rate).