Future Value Calculator for Single Present Value

What is a Future Value Calculator for Single Present Value?

A Future Value Calculator for Single Present Value is a financial tool that helps investors and financial planners estimate how much a single investment will be worth at a specific point in the future, given a certain interest rate and time period. This calculator is essential for understanding the potential growth of investments and making informed financial decisions.

Formula for Future Value Calculation

The formula for calculating the future value of a single present value is:

\[FV = PV \times (1 + r)^t\]

Where:

• FV = Future Value
• PV = Present Value (initial investment)
• r = Annual Interest Rate (as a decimal)
• t = Time Period (in years)

Calculation Steps

1. Convert the annual interest rate to a decimal by dividing it by 100.
2. Add 1 to the decimal interest rate.
3. Raise the result to the power of the time period in years.
4. Multiply the result by the present value.

Example

Let's consider a scenario with the following details:

• Present Value: $10,000
• Annual Interest Rate: 5%
• Time Period: 10 years

Calculation:

1. Convert interest rate: 5% ÷ 100 = 0.05
2. Apply the formula: FV = 10,000 × (1 + 0.05)^10
3. Calculate: FV = 10,000 × 1.6288946 = $16,288.95

In this example, a $10,000 investment at 5% annual interest would grow to $16,288.95 after 10 years. The total interest earned would be $6,288.95. This future value calculation demonstrates the power of compound interest over time.