Compound Growth Rate Calculator
Understanding Compound Growth
Compound growth is a powerful concept that describes how a quantity grows over time when the growth rate is applied not only to the initial amount but also to the accumulated growth from previous periods. This is often referred to as "interest on interest" in financial contexts, but the principle applies to many areas, including population growth, scientific experiments, and investment returns.
The formula for compound growth is:
Future Value = P * (1 + r)^n
Where:
- P is the initial value (Principal amount).
- r is the annual growth rate (expressed as a decimal).
- n is the number of years the growth is applied.
This calculator helps you project the future value of an initial amount based on a consistent annual growth rate over a specified number of years. It illustrates how the accelerating nature of compounding can lead to significant increases over time.
How to Use the Calculator:
- Initial Value: Enter the starting amount or quantity.
- Annual Growth Rate (%): Input the expected yearly percentage increase. For example, if you expect a 5% annual growth, enter '5'.
- Number of Years: Specify how many years you want to project the growth for.
- Click the "Calculate" button to see the projected future value.
Example:
Let's say you invest an initial value of $1,000. You anticipate an average annual growth rate of 7% over 10 years. Using the calculator:
- Initial Value: 1000
- Annual Growth Rate (%): 7
- Number of Years: 10
The calculator will show you the projected value after 10 years, demonstrating the effect of compounding 7% growth annually on your initial $1,000 investment.
function calculateCompoundGrowth() {
var initialValue = parseFloat(document.getElementById("initialValue").value);
var annualGrowthRate = parseFloat(document.getElementById("annualGrowthRate").value);
var numberOfYears = parseInt(document.getElementById("numberOfYears").value);
var resultElement = document.getElementById("result");
resultElement.innerHTML = ""; // Clear previous results
if (isNaN(initialValue) || isNaN(annualGrowthRate) || isNaN(numberOfYears)) {
resultElement.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (initialValue < 0 || annualGrowthRate < 0 || numberOfYears < 0) {
resultElement.innerHTML = "Please enter non-negative values for all fields.";
return;
}
var rateAsDecimal = annualGrowthRate / 100;
var futureValue = initialValue * Math.pow(1 + rateAsDecimal, numberOfYears);
resultElement.innerHTML = "Initial Value: " + initialValue.toFixed(2) + "" +
"Annual Growth Rate: " + annualGrowthRate.toFixed(2) + "%" +
"Number of Years: " + numberOfYears + "" +
"
Projected Future Value: " + futureValue.toFixed(2) + "";
}
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