Fe Exam Calculator

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Reviewed by: Dr. Eleanor Vance, P.E.

Welcome to the comprehensive FE Exam Calculator module. This tool utilizes the core principles of Engineering Economics (Time Value of Money – TVM) to solve for any unknown variable: Future Value (F), Present Value (P), Interest Rate (V), or Number of Periods (Q).

FE Exam Financial Calculator

Note: Enter at least three values. Leave the field you want to solve for blank.

Calculated Result:

Enter Values Above

Calculation Steps

FE Exam Calculator Formula

The calculation is based on the compound interest Time Value of Money (TVM) formulas, commonly used in the FE Exam Engineering Economics section:

$$ F = P (1 + V)^Q $$
Where:
F = Future Value (or Future Worth)
P = Present Value (or Present Worth)
V = Interest Rate per Period (as a decimal)
Q = Number of Compounding Periods

Formula Sources (for academic integrity):

Variables Explained

Understanding the inputs is crucial for accurate FE Exam problem-solving:

  • F (Future Value): The single amount of money at some time in the future that is equivalent to a present sum, given an interest rate and number of periods.
  • P (Present Value): The current worth of a future sum of money or stream of cash flows given a specified rate of return.
  • V (Rate per Period): The effective interest rate (i) used for compounding, expressed as a decimal (e.g., 0.05).
  • Q (Number of Periods): The number of compounding periods (n) over the investment horizon (e.g., years, quarters, months).

How to Calculate TVM (Example)

Let’s use the calculator to find the Future Value (F) of $5,000 invested at 6% annual interest for 10 years:

  1. Identify Knowns: P = $5,000, V = 6% (or 0.06), Q = 10.
  2. Select Formula: Since we are solving for F, we use $F = P (1 + V)^Q$.
  3. Substitute Values: $F = \$5,000 \times (1 + 0.06)^{10}$.
  4. Calculate Power: $(1.06)^{10} \approx 1.7908$.
  5. Final Result: $F = \$5,000 \times 1.7908 = \$8,954.24$. The Future Value is $8,954.24.

What is the Time Value of Money (TVM) Concept?

The Time Value of Money (TVM) is a fundamental financial principle that states that money available at the present time is worth more than the identical sum in the future, due to its potential earning capacity. This core tenet of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.

In the FE Exam, TVM is crucial for the Engineering Economics section, enabling engineers to compare investment alternatives, calculate loan payments, determine optimal replacement schedules for equipment, and justify capital expenditures based on equivalent worth at different points in time.

Related Engineering Calculators

You may also find these related tools helpful for your FE preparation:

Frequently Asked Questions (FAQ)

  • Why is TVM important for the FE Exam?

    TVM is a cornerstone of Engineering Economics. Questions involving present worth, future worth, annuities, and gradient series factor heavily into this section. Mastering the four basic TVM variables (P, F, A, i, N) is essential for passing.

  • Do I enter the Interest Rate (V) as a percent or decimal?

    In this calculator, you enter the number as a percentage (e.g., 5 for 5%). The internal calculation converts it to a decimal (0.05). For manual calculations, always use the decimal form.

  • What happens if I enter all four values (F, P, V, Q)?

    The calculator will check for consistency. If the values satisfy the formula $F \approx P(1+V)^Q$ within a small tolerance, it will confirm they are consistent. Otherwise, it will report an inconsistency error, suggesting you re-check your inputs.

  • What does ‘Q’ (Number of Periods) refer to?

    Q refers to the number of compounding periods. If the rate (V) is an annual rate, Q is the number of years. If the rate is a monthly rate, Q must be the number of months.

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