What is Time Value of Money (TVM)?

Time Value of Money is a financial concept that states money available today is worth more than the same amount in the future due to its potential earning capacity through interest or investment returns.

What are the 5 TVM variables?

The 5 TVM variables are: N (number of periods), I/Y (interest rate per year), PV (present value), PMT (periodic payment), and FV (future value). Given any 4 variables, you can solve for the 5th.

What is the difference between ordinary annuity and annuity due?

An ordinary annuity has payments at the end of each period (like most loans), while an annuity due has payments at the beginning of each period (like rent or lease payments).

How does compounding frequency affect TVM calculations?

More frequent compounding (monthly vs annually) results in higher effective interest rates and larger future values. The interest earned in each period itself earns interest in subsequent periods.

TVM Calculator

Time Value of Money Calculator - Solve for Present Value, Future Value, Payment, Interest Rate, or Number of Periods.

Time Value of Money Calculator

Enter 4 of the 5 variables and solve for the unknown

Solve For:

PVPresent Value

FVFuture Value

PMTPayment

NPeriods

I/YInterest Rate

TVM Variables

N - Number of Periods Total number of compounding periods

I/Y - Interest Rate (%/year) Annual interest rate

PV - Present Value ($) Negative = cash outflow (investment)

PMT - Payment ($) Periodic payment amount

FV - Future Value ($) Target future value

Periods Per Year Compounding frequency

Payment Timing When payments are made

TVM Results

N (Periods)

120

10 years

I/Y (Rate)

6.00%

per year

PV (Present)

Today's value

PMT (Payment)

per period

FV (Future)

End value

Value Composition

Principal (0%)

Payments (0%)

Interest (0%)

Cash Flow Summary

Initial Investment (PV) $0

Total Payments $0

                    Total Invested
                    $0
                

Interest Earned $0

                    Future Value (FV)
                    $0
                

Effective Annual Rate 0%

Cash Flow Timeline

Present

$0 x N periods

Future

Interest Rate Sensitivity

Rate	Monthly Rate	Future Value	Difference

Period-by-Period Schedule (First 24 Periods)

Period	Payment	Interest	Principal Change	Balance

TVM Formula

FV = PV(1+r)^n + PMT × [(1+r)^n - 1] / r

Understanding Time Value of Money

The 5 TVM Variables

N: Number of compounding periods
I/Y: Interest rate per year
PV: Present value (today's money)
PMT: Periodic payment amount
FV: Future value (end amount)

Cash Flow Sign Convention

Negative (-): Cash outflow (money you pay)
Positive (+): Cash inflow (money you receive)
Investment: PV is negative (you pay)
Loan: PV is positive (you receive)
Savings: PMT is negative (you deposit)

Common TVM Applications

Retirement planning calculations
Loan payment determination
Investment growth projections
Mortgage amortization
Bond pricing and valuation

Tips for Accurate Calculations

Match periods to payment frequency
Use consistent sign conventions
Consider compounding frequency
Account for payment timing (begin/end)
Verify with reverse calculation

Time Value of Money Calculator

Solve For:

TVM Variables

TVM Results

Value Composition

Cash Flow Summary

Cash Flow Timeline

Interest Rate Sensitivity

Period-by-Period Schedule (First 24 Periods)

TVM Formula

Understanding Time Value of Money

The 5 TVM Variables

Cash Flow Sign Convention

Common TVM Applications

Tips for Accurate Calculations

Related Calculators

PPMI Calculator (US-Specific)

Home Loan Mortgage Calculator

Points/Buydown Calculator

Musharakah Mutanaqisah (MM) Calculator

SBA Loan Calculator

Calorie Calculator