Enter the principal amount, annual interest rate, and time in years into the calculator to determine the future value of a loan.
Loan Growth Formula
The following formula is used to calculate the future value of a loan.
FV = P * (1 + r)^t
Variables:
- FV is the future value of the loan ($)
- P is the principal amount ($)
- r is the annual interest rate (as a decimal)
- t is the time in years
To calculate the future value of a loan, multiply the principal amount by the growth factor, which is one plus the annual interest rate raised to the power of the number of years.
What is Loan Growth?
Loan growth refers to the increase in the value of a loan over time due to the application of interest. It is an important concept in finance as it determines the amount that will need to be repaid at the end of the loan term. Understanding loan growth can help borrowers plan for their financial future and make informed decisions about borrowing and repayment.
How to Calculate Loan Growth?
The following steps outline how to calculate the future value of a loan.
- First, determine the principal amount of the loan (P).
- Next, determine the annual interest rate (r) and convert it to a decimal by dividing by 100.
- Next, determine the time in years (t).
- Next, gather the formula from above = FV = P * (1 + r)^t.
- Finally, calculate the future value of the loan (FV).
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Principal amount of the loan (P) = $10,000
Annual interest rate (r) = 5%
Time in years (t) = 10
