Finance Calculator: Time Value of Money
This finance calculator can be used to calculate Future Value (FV), Periodic Payment (PMT), Interest Rate (I/Y), Number of Compounding Periods (N), and Present Value (PV). Each tab represents the parameter you want to calculate. Works just like the BA II Plus or HP 12CP calculators for time value of money (TVM) calculations.
Finance Calculator
| Period | PV | PMT | Interest | FV |
|---|---|---|---|---|
| 1 | $20,000.00 | $-2,000.00 | $1,200.00 | $-19,200.00 |
| 2 | $19,200.00 | $-2,000.00 | $1,152.00 | $-18,352.00 |
| 3 | $18,352.00 | $-2,000.00 | $1,101.12 | $-17,453.12 |
| 4 | $17,453.12 | $-2,000.00 | $1,047.19 | $-16,500.31 |
| 5 | $16,500.31 | $-2,000.00 | $990.02 | $-15,490.33 |
| 6 | $15,490.33 | $-2,000.00 | $929.42 | $-14,419.75 |
| 7 | $14,419.75 | $-2,000.00 | $865.18 | $-13,284.93 |
| 8 | $13,284.93 | $-2,000.00 | $797.10 | $-12,082.03 |
| 9 | $12,082.03 | $-2,000.00 | $724.92 | $-10,806.95 |
| 10 | $10,806.95 | $-2,000.00 | $648.42 | $-9,455.36 |
Understanding the Time Value of Money (TVM)
In basic finance, one of the most important concepts is the Time Value of Money (TVM). This concept explains why a dollar in hand today is worth more than a dollar promised in the future. The main elements involved are Present Value (PV), Future Value (FV), Interest Rate (I/Y), and Number of Periods (N). Optional but useful is Periodic Payment (PMT).
FV = PV × (1 + r)
FV = 100 × (1 + 0.10) = 110
After two years, interest on interest compounds, giving:
FV = 100 × (1 + 0.10)² = 121. This shows how PV grows into FV over multiple periods.
What is Present Value (PV)?
Present Value is the current worth of a future amount of money given a specified rate of return. Using a discount rate (inverse of interest), we can find out how much a future sum is worth today.
Periodic Payments (PMT)
PMT represents regular inflows or outflows in finance, such as rental income or mortgage payments. Our Finance Calculator can compute complex PMT scenarios including timing at the start or end of compounding periods.
The Importance of a Finance Calculator
Financial calculators simplify TVM calculations for students and professionals. Whether for investment analysis, mortgages, or loans, a finance calculator is essential for understanding financial outcomes. Our web-based Finance Calculator also includes visual schedules and graphs that make learning faster and more intuitive.
Sample Finance Schedule
| Period | PV | PMT | Interest | FV |
|---|---|---|---|---|
| 1 | $20,000 | $-2,000 | $1,200 | $-19,200 |
| 2 | $19,200 | $-2,000 | $1,152 | $-18,352 |
| 3 | $18,352 | $-2,000 | $1,101 | $-17,453 |
| 4 | $17,453 | $-2,000 | $1,047 | $-16,500 |
| 5 | $16,500 | $-2,000 | $990 | $-15,490 |
Investing with the knowledge of TVM allows you to make smarter decisions and maximize your financial potential.