Time Value of Money Calculator

Complete TVM Calculator - Calculate FV, PV, PMT, Rate & Periods

Select Calculation Type

Future Value Parameters

Initial investment amount ($0 - $100,000,000)
Regular payment amount ($0 - $1,000,000)
Annual interest rate (0-100%)
Total number of periods (1-100)
How often interest is compounded
Payment Timing
Payments at period end Payments at period beginning
Target future amount ($0 - $100,000,000)
Regular payment (negative for outflows)
Annual discount rate (0-100%)
Total number of periods (1-100)
How often interest is compounded
Payment Timing
Payments at period end Payments at period beginning
Initial amount ($0 - $100,000,000)
Target future amount ($0 - $100,000,000)
Annual interest rate (0-100%)
Total number of periods (1-360)
How often interest is compounded
Payment Timing
Payments at period end Payments at period beginning
Initial amount (negative for loans)
Regular payment (negative for outflows)
Target future amount
Total number of periods (1-360)
How often interest is compounded
Payment Timing
Payments at period end Payments at period beginning
Initial amount (negative for loans)
Regular payment (negative for outflows)
Target future amount
Annual interest rate (0.01-100%)
How often interest is compounded
Payment Timing
Payments at period end Payments at period beginning

Future Value Results

Future Value
$3,108.93
Present Value
$1,000.00
Total Payments
$1,000.00
Interest Earned
$1,108.93
Total Return
110.89%
Present Value
$5,583.95
Future Value
$10,000.00
Total Payments
$4,416.05
Interest
$4,416.05
Discount Rate
6.00%
Payment Amount
$599.55
Present Value
$100,000.00
Future Value
$0.00
Total Payments
$179,865.00
Total Interest
$79,865.00
Interest Rate
6.00%
Present Value
$100,000.00
Payment
-$600.00
Future Value
$0.00
Effective Rate
6.17%
Number of Periods
360 months
Years
30.0 years
Present Value
$100,000.00
Payment
-$600.00
Future Value
$0.00

Investment Analysis

Key Metrics

Total Interest: $1,108.93
Effective Annual Rate: 6.17%
Total Cost: $2,108.93

Payment Breakdown

Principal: 47.4%
Interest: 52.6%

Understanding Time Value of Money

The Time Value of Money (TVM) is a fundamental financial concept that states money available now is worth more than the same amount in the future due to its potential earning capacity. This principle is the foundation for virtually all financial decisions, from personal investments to corporate finance.

The Five TVM Variables

FV = PV Γ— (1 + r)^n + PMT Γ— [(1 + r)^n - 1] / r
Where: FV = Future Value, PV = Present Value, PMT = Payment, r = Interest Rate, n = Periods

Future Value (FV)

Future Value calculates what an investment made today will be worth in the future, considering compound interest and regular contributions. It's essential for retirement planning, education savings, and investment goal setting.

Present Value (PV)

Present Value determines the current worth of future cash flows, discounted at a specific rate. It's crucial for evaluating investment opportunities, loan decisions, and settlement valuations.

Payment (PMT)

Payment calculations determine the periodic amount needed to achieve a financial goal, such as mortgage payments, loan installments, or retirement savings contributions.

Interest Rate

The interest rate represents the cost of money or return on investment. It's used to evaluate loan terms, investment returns, and compare different financial products.

Number of Periods

Periods represent the time duration of the financial transaction. It's calculated to determine loan payoff time, investment duration, or savings timeframes.

Applications of TVM

  • Investment Planning: Calculate how much to save monthly to reach retirement goals
  • Loan Analysis: Determine mortgage payments, auto loan terms, and personal loans
  • Business Valuation: Evaluate investment opportunities and project future cash flows
  • Retirement Planning: Estimate how much you need to save for a comfortable retirement
  • Education Funding: Plan for future college expenses with inflation adjustments

Key Factors Affecting TVM Calculations

  • Compounding Frequency: More frequent compounding results in higher returns
  • Payment Timing: Beginning vs. end of period payments affect totals
  • Interest Rates: Higher rates significantly impact long-term growth
  • Time Horizon: Longer periods magnify the effects of compounding
  • Inflation: Real returns must account for purchasing power changes

TVM in Real Life

Understanding TVM helps make informed financial decisions. For example, when choosing between a lump-sum payment or annuity, TVM calculations show which option provides better long-term value. Similarly, TVM helps evaluate whether paying off a mortgage early or investing the money elsewhere is more beneficial.