Time Value of Money (TVM) Solver

How to calculate Time Value of Money Solver?

Provide the known inputs (PV, FV, annual rate, NPER, PMT, compounding) and select which variable to solve; the solver rearranges standard TVM formulas and computes the missing value.

Key formula for compounded growth: FV = PV * (1 + r/m)^(m * t) — equivalently for periodic terms: FV = PV * (1 + periodic_rate)^(nper).

Using the Time Value of Money Solver calculator: an example

Example inputs: PV = $5,000; Annual rate = 6%; Compounded monthly; Term = 5 years; no periodic payments (PMT = $0).

Step-by-step calculation:

• Compute periodic rate: r_period = 0.06 / 12 = 0.005 (0.5% per month).
• Compute total periods: n = 12 * 5 = 60 months.
• Apply the formula: FV = 5000 * (1 + 0.005)^60 ≈ 5000 * 1.34885 ≈ $6,744.
• Interpretation: $6,744 is the estimated value of the $5,000 investment after 5 years with monthly compounding at 6%.

Frequently Asked Questions

Can I solve for the periodic payment (PMT)?

Yes. Provide the other variables (PV or FV, rate, and NPER), select Payment (PMT) as the unknown, and the solver will compute the required periodic payment.

How is the annual interest rate converted for compounding?

The calculator divides the annual rate by the chosen compounding frequency to get the periodic rate (for example, monthly: r_period = annual_rate / 12).

What if payments occur at the beginning of each period?

Select "Beginning of Period (Annuity Due)" for payment timing; results adjust appropriately (typically multiplying by 1 + periodic_rate where required).