1. What is the Growth and Decay Formula?

The growth and decay formula calculates the future value of an investment based on a constant growth rate over time. This formula is widely used in stock market analysis, compound interest calculations, and financial forecasting.

2. How Does the Calculator Work?

The calculator uses the growth and decay formula:

Where:

• \( P \) — Principal amount (initial investment)
• \( g \) — Growth rate (decimal form, positive for growth, negative for decay)
• \( t \) — Time period in years

Explanation: The formula calculates compound growth/decay over time, showing how investments appreciate or depreciate at a constant rate.

3. Importance of Growth Calculation

Details: Accurate growth calculation is essential for investment planning, retirement forecasting, stock valuation, and understanding long-term financial outcomes.

4. Using the Calculator

Tips: Enter principal amount in dollars, growth rate as a decimal (e.g., 0.05 for 5% growth, -0.03 for 3% decay), and time in years. All values must be valid.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between growth and decay?
A: Growth occurs when g > 0 (positive rate), increasing the value over time. Decay occurs when g < 0 (negative rate), decreasing the value over time.

Q2: How do I convert percentage to decimal?
A: Divide the percentage by 100. For example, 7% = 0.07, -5% = -0.05.

Q3: Can this formula handle fractional years?
A: Yes, the formula works with fractional time values (e.g., 2.5 years).

Q4: What are typical growth rates for stocks?
A: Historical stock market returns average 7-10% annually, but individual stocks can vary significantly.

Q5: How accurate is this model for real-world investments?
A: This assumes constant growth rate, which is simplified. Real investments often have variable returns.