1. What is the Money Market Calculator?

The Money Market Calculator from Forbes Bank helps you estimate the future value of an investment based on compound interest. It uses the standard future value formula to project growth of money market accounts.

2. How Does the Calculator Work?

The calculator uses the Future Value formula:

Where:

• \( Principal \) — Initial investment amount
• \( Rate \) — Annual interest rate (as decimal)
• \( Time \) — Investment period in years

Explanation: The formula accounts for compound interest, where interest is earned on both the initial principal and accumulated interest.

3. Importance of Money Market Calculation

Details: Understanding future value helps in financial planning, comparing investment options, and setting realistic savings goals.

4. Using the Calculator

Tips: Enter principal amount in dollars, annual interest rate as a decimal (e.g., 0.05 for 5%), and time in years. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: How often is interest compounded?
A: This calculator assumes annual compounding. For different compounding periods, the formula would need adjustment.

Q2: Are money market rates guaranteed?
A: Money market rates typically fluctuate. This calculator provides projections based on current rates.

Q3: What's the difference between APR and APY?
A: APR doesn't account for compounding, while APY does. This calculator uses APR for simplicity.

Q4: Are there fees or taxes considered?
A: This calculator doesn't account for fees, taxes, or inflation which may affect actual returns.

Q5: Can I use this for other investments?
A: While designed for money markets, the formula works for any simple compound interest calculation.