1. What is the 10% Return on Investment Formula?

The future value formula calculates how much an investment will grow at a fixed 10% annual return rate over time. It shows the power of compound interest in growing your money.

2. How Does the Calculator Work?

The calculator uses the future value formula:

Where:

• \( FV \) — Future value of the investment (USD)
• \( P \) — Principal investment amount (USD)
• \( t \) — Investment period in years
• 0.10 — 10% annual return rate

Explanation: The formula accounts for compound growth, where each year's earnings generate additional earnings in subsequent years.

3. Importance of Future Value Calculation

Details: Calculating future value helps investors understand potential investment growth, plan financial goals, and compare different investment options.

4. Using the Calculator

Tips: Enter your initial investment amount in USD and the number of years you plan to invest. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is 10% return realistic for investments?
A: While historical stock market averages are around 7-10%, actual returns vary yearly. This calculator shows hypothetical growth at a fixed 10% rate.

Q2: Does this account for taxes or fees?
A: No, this is a simplified calculation that doesn't account for taxes, investment fees, or inflation.

Q3: What's the difference between simple and compound interest?
A: Simple interest calculates only on the principal, while compound interest includes interest on previously earned interest.

Q4: Can I use this for monthly investments?
A: This calculator is for a single lump sum investment. Different formulas are needed for regular contributions.

Q5: How often is the interest compounded in this calculation?
A: This formula assumes annual compounding, where interest is calculated once per year.