Time Value of Money (TVM) Calculator

Calculate the present and future value of money, considering the time value of money principle.

Calculator

Enter Your Financial Details

Enter the present value of your investment.

Enter the annual interest rate as a percentage.

Enter the number of periods (years).

Enter the periodic payment amount (if any).

Table of Contents

1 TVM Formula
2 How to Calculate TVM
3 TVM - Practical Examples
Concept

TVM Formula

The Time Value of Money (TVM) is a fundamental financial concept that states that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.

Formula:
FV = PV × (1 + r)^n + PMT × ((1 + r)^n - 1) / r

Where:

  • FV = Future Value
  • PV = Present Value
  • r = Interest rate per period
  • n = Number of periods
  • PMT = Periodic payment
Steps

How to Calculate TVM

To calculate TVM, follow these steps:

  1. 1
    Determine the present value of your investment
  2. 2
    Identify the interest rate per period
  3. 3
    Determine the number of periods
  4. 4
    Calculate the future value using the TVM formula
  5. 5
    Consider any periodic payments if applicable
Examples

TVM - Practical Examples

Example 1 Simple Investment

Present Value: $1,000
Interest Rate: 5%
Periods: 10 years
Payment: $0

Future Value ≈ $1,628.89

Example 2 Regular Savings

Present Value: $0
Interest Rate: 4%
Periods: 20 years
Payment: $100/month

Future Value ≈ $36,465.10

Example 3 Retirement Planning

Present Value: $50,000
Interest Rate: 7%
Periods: 30 years
Payment: $500/month

Future Value ≈ $1,022,426.00

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