1. What is the Maturity Value Calculation?

The maturity value calculation determines the total amount you will receive at the end of an investment period using simple interest. It includes both the principal amount and the interest earned over time.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( P \) — Principal amount (initial investment)
• \( r \) — Annual interest rate (in decimal form)
• \( t \) — Time period in years

Explanation: The formula calculates the total interest earned and adds it to the original principal to determine the final maturity value.

3. Importance of Maturity Value

Details: Knowing the maturity value helps investors understand how much their investment will grow over time and compare different investment options.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on both principal and accumulated interest.

Q2: When is simple interest typically used?
A: Simple interest is commonly used for short-term loans, car loans, and some types of bonds.

Q3: How does time affect the maturity value?
A: The longer the time period, the more interest accumulates, resulting in a higher maturity value.

Q4: Can I use this for monthly calculations?
A: Yes, but convert months to years (e.g., 6 months = 0.5 years) for accurate results.

Q5: What if I want to calculate compound interest?
A: You would need a different formula: \( A = P \times (1 + r/n)^{n \times t} \), where n is compounding frequency.