Things You'll Need:
- Calculator
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Step 1
Identify the interest rate for your investment. For our example, we will be assuming an interest rate of 5 percent annually. Convert this number into decimals. For example, 5 percent would be 0.05.
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Step 2
Add 1 to your interest rate. In our example, we would be adding 1 to 0.05, which gives us 1.05. We will call this number i, for interest.
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Step 3
Determine the duration of this investment. For our example, we will assume that we are calculating the terminal value at 10 years in the future. We will call this number y, for years.
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Step 4
Calculate i to the yth power. Depending on your calculator, the button for performing this function may be "x^y" or something similar. In our example, i=1.05 and y=10. 1.05^10 approximately equals 1.628. We will call this number A.
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Step 5
Multiply A times your principal investment. For our example, we will assume that you invested $1,000. So overall, our example investment is $1,000 at 5 percent interest a year for 10 years. If we multiply the principal of $1,000 times A, which in our case is 1.628, we get $1,628.89. This is the terminal value of your investment.
