1. What is Maturity Amount?

The maturity amount is the total sum received at the end of an investment period, including the principal and compounded interest. It's a key metric for evaluating investment growth over time.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( P \) — Principal investment amount
• \( r \) — Periodic interest rate (as decimal)
• \( n \) — Number of compounding periods

Explanation: The formula accounts for exponential growth of money through compound interest, where interest earned in each period is added to the principal for the next period's calculation.

3. Importance of Maturity Calculation

Details: Calculating maturity amount helps investors compare investment options, plan financial goals, and understand the power of compounding over time.

4. Using the Calculator

Tips: Enter principal amount in dollars, interest rate as percentage (e.g., 5 for 5%), and number of periods (years, months, etc.). All values must be positive.

5. Frequently Asked Questions (FAQ)

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

Q2: How often should interest compound?
A: More frequent compounding (monthly vs. annually) yields higher returns. The calculator assumes compounding frequency matches the period unit.

Q3: Can I use this for monthly investments?
A: This calculates single lump-sum investments. For regular contributions, use a future value of annuity formula.

Q4: How does inflation affect maturity value?
A: The calculator shows nominal returns. For real returns, subtract inflation rate from the interest rate.

Q5: Are taxes considered in this calculation?
A: No, this shows pre-tax maturity amount. Actual after-tax returns may be lower depending on tax laws.