1. What is the Price Increase Formula?

The Price Increase Formula calculates how an initial amount grows over time with compound annual growth. It's commonly used for financial projections, investment analysis, and price forecasting.

2. How Does the Calculator Work?

The calculator uses the compound growth formula:

Where:

• \( initial \) — Starting amount in dollars
• \( rate \) — Annual growth rate (decimal form, e.g., 0.05 for 5%)
• \( years \) — Number of years for projection

Explanation: The formula accounts for compound growth where each year's increase builds on the previous year's total.

3. Importance of Price Projection

Details: Accurate price projections help in financial planning, investment decisions, budgeting, and understanding long-term cost implications.

4. Using the Calculator

Tips: Enter initial amount in dollars, annual rate as decimal (0.10 for 10%), and number of years. The calculator shows the final amount and a growth graph.

5. Frequently Asked Questions (FAQ)

Q1: How does this differ from simple interest?
A: Compound growth means each year's increase is calculated on the accumulated total, not just the original amount.

Q2: What's a typical growth rate to use?
A: Depends on context - inflation might be 2-3%, investments 5-10%, but can vary widely.

Q3: Can I calculate monthly instead of yearly?
A: Yes, adjust rate to monthly (divide annual by 12) and years to months (multiply by 12).

Q4: Why does the graph sometimes show exponential growth?
A: Compound growth leads to exponential curves as the amount grows faster over time.

Q5: How accurate are these projections?
A: They assume constant growth rate - real-world factors may cause deviations.