What is an Interest Rate Calculator? (Definition & Example)
Interest rate calculators help you determine the rate of return or interest rate required to reach a financial goal, or the rate applied to a loan or investment. This tool is useful for comparing loan offers, investment returns, and understanding the cost or growth of money over time.
- Formula: r = (FV / PV)1/t - 1
- r: Interest rate (decimal)
- FV: Future value
- PV: Present value
- t: Number of periods (years)
For example, if you invest $1,000 and it grows to $1,500 in 5 years, use this Interest Rate Calculator to find the annual rate of return. It’s ideal for financial planning, loan comparisons, and investment analysis.
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