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# FVA Calculator Online

The FVA Calculator simplifies the process of predicting how much an annuity will grow over a given period when interest accumulates. This tool is particularly useful for those planning their retirement or any long-term investment, allowing users to make informed decisions based on the potential future value of their current investments.

## Formula of FVA Calculator

To calculate the Future Value of an Annuity (FVA), you can use the following formula:

Where:

• FVA is the future value of the annuity.
• P is the periodic payment amount.
• r is the interest rate per period.
• n is the number of periods.

Explanation:

• Periodic Payment Amount (P): This is the amount of money deposited or paid at each interval.
• Interest Rate (r): This is the interest rate per period. If the annual interest rate is given, and payments are made monthly, divide the annual interest rate by 12.
• Number of Periods (n): This is the total number of payment periods. For example, if payments are made monthly for 5 years, the number of periods would be 60 (5 years * 12 months).

## Practical Applications

These examples illustrate how the FVA varies with different inputs, helping users understand the long-term impacts of their investments.

## Example of FVA Calculator

Consider calculating the future value of a retirement account where you contribute \$500 monthly at an annual interest rate of 5% for 30 years. The formula we'll use is:

FVA = P * ((1 + r)^n - 1) / r

Where:

• P = \$500 (monthly contribution)
• r = 0.05/12 (monthly interest rate, as the annual rate is 5%)
• n = 30 * 12 (total number of monthly payments over 30 years)
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Substituting the values into the formula:

FVA = 500 * ((1 + 0.05/12)^(30*12) - 1) / (0.05/12)

Let's calculate that now.

FVA = 500 * ((1 + 0.05/12)^(360) - 1) / (0.05/12)
FVA ≈ 500 * 5.02257534 / 0.0041667 ≈ 602832.79

## Most Common FAQs

Q1: How does compounding frequency affect the FVA?

A: Compounding more frequently results in higher future values due to interest being calculate on the accumulated interest more often.

Q2: Can I use the FVA calculator for any type of annuity?

A: Yes, the FVA calculator works for both ordinary annuities and annuities due, although the timing of payments slightly alters the formula used.