A method and system for calculating the free energy difference between a target state and a reference state. The method includes determining one or more intermediate states using a coupling parameter, performing molecular simulations to obtain ensembles of micro-states for each of the system states, and calculating the free energy difference by an analysis of the ensembles of micro-states of the system states. The method can be particularly suited for calculating physical or non-physical transformation of molecular systems such as ring-opening, ring-closing, and other transformations involving bond breaking and/or formation. A soft bond potential dependent on a bond stretching component of the coupling parameter and different from the conventional harmonic potential is used in the molecular simulations of the system states for the bond being broken or formed during the transformation.
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