Enter the principal investment, rate of interest, and time of investment into the calculator. The calculator will determine the maturity value of the investment.

Maturity Value Calculator

Enter any 3 values to calculate the missing variable

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Maturity Value Formula

The following formula can be used to calculate the maturity value of an investment.

V = P * (1+R)^T
  • V – Maturity Value
  • P – Principal Invested
  • R – Rate of Interest
  • T – Time of Investment

Maturity Value Definition

A maturity to value measures how much an investment will make at “maturity.” Maturity could be any time frame or a specific time frame designated by the investment.

Maturity Value Example

How to calculate maturity value?

First, determine the total principal invested.

For this example, the total principal invested is found to be $50,000.00.

Next, determine the rate of interest.

In this case, the interest rate is 4%.

Next, determine the total time of the investment.

For this example, the time of the investment is 5 years.

Finally, calculate the maturity using the formula above:

V = P * (1+R)^T

V = 50000 * (1+.04)^5

V = $60,832.64

FAQ

What is the difference between Yield to Maturity (YTM) and Bond Equivalent Yield (BEY)?

Yield to Maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures, including all paid interest and the principle. It assumes that all payments are made on time and the bond is held to maturity. Bond Equivalent Yield (BEY), on the other hand, is a calculation for bond yield that annualizes the yield of a bond, or investment, that does not pay out annually. This calculation allows investors to compare yields between different bonds and investments, regardless of their payment schedules.

How does the Effective Annual Yield differ from the nominal interest rate?

The Effective Annual Yield (EAY) is the interest rate on an investment, annualized and compounded for a period of one year. Unlike the nominal interest rate, which refers to the rate before adjustment for inflation or other factors, the EAY provides a more accurate depiction of an investor’s actual return, taking into account the effect of compounding interest within a year.

What is Modified Duration and how is it used in bond valuation?

Modified Duration is a measure of a bond’s sensitivity to changes in interest rates, representing the percentage change in price for a unit change in yield. It is an adjusted version of the Macaulay duration, which accounts for changing yield rates. Investors use modified duration to assess the risk of bond price movements due to interest rate changes. A higher modified duration indicates greater sensitivity to interest rate changes, implying higher risk and potential reward.