Time Value of Money Calculator
The Time Value of Money (TVM) Calculator helps you calculate present and future values of investments, loans, and savings, based on interest rates and time. It is essential for making informed financial decisions, comparing investment options, and understanding how money grows over time.
What is Time Value of Money Calculator?
The Time Value of Money Calculator helps you calculate how the value of money changes over time. It calculates the present value (PV) or future value (FV) of money, helping individuals and businesses make informed decisions about investments, loans, and savings plans.
How to Use the Time Value of Money Calculator?
To use the Time Value of Money Calculator, provide the following inputs:
- Present Value (PV): The current value of the investment or loan.
- Future Value (FV): The value of the investment or loan at a specified future time.
- Interest Rate: The annual interest rate applied to the investment or loan.
- Time: The duration (in years) for which the money will be invested or borrowed.
What is the Formula of the Time Value of Money Calculator?
The Time Value of Money formula used for calculating Present Value (PV) and Future Value (FV) is as follows:
Future Value (FV) = PV × (1 + Rate)^Time
or
Present Value (PV) = FV / (1 + Rate)^Time
Advantages and Disadvantages of Time Value of Money Calculator
Advantages:
- Helps investors, borrowers, and financial planners make informed decisions.
- Useful for comparing investment opportunities and loan options.
- Shows how money grows or diminishes over time due to interest.
Disadvantages:
- Assumes a constant interest rate, which may not always be realistic in real-life scenarios.
- Does not account for factors like inflation or additional fees that may affect the value of money.