1. What is the Maturity Value Formula?

The Maturity Value formula calculates the future value of an investment based on compound interest. It shows how much an investment will grow over a specific period when interest is compounded monthly.

2. How Does the Calculator Work?

The calculator uses the Maturity Value formula:

Where:

• \( P \) — Principal amount (initial investment)
• \( r \) — Annual interest rate (as percentage)
• \( m \) — Time period in months

Explanation: The formula accounts for monthly compounding by dividing the annual rate by 12 and raising to the power of the number of months.

3. Importance of Maturity Value Calculation

Details: Calculating maturity value helps investors understand potential returns, compare investment options, and plan financial goals.

4. Using the Calculator

Tips: Enter principal amount in dollars, annual interest rate as percentage, and time period in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How does compounding frequency affect results?
A: More frequent compounding (monthly vs annually) yields higher returns due to interest being calculated on accumulated interest.

Q2: What's the difference between simple and compound interest?
A: Simple interest is calculated only on principal, while compound interest includes interest on previously earned interest.

Q3: Can I use this for daily compounding?
A: No, this calculator assumes monthly compounding. For daily compounding, a different formula would be needed.

Q4: How accurate are these calculations?
A: This provides theoretical results assuming constant rate and no additional deposits/withdrawals.

Q5: Does this account for taxes or fees?
A: No, the calculation shows gross returns before any taxes or investment fees.