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Time Value of Money Formula Sheet

This document provides a summary of common time value of money formulas. It lists 11 formulas used to calculate future value, present value, annuities, perpetuities, interest rates, time periods, and growing/declining cash flows under various compounding assumptions. The formulas can be used for lump sums, annuities, and perpetuities with annual, semi-annual, or continuous compounding over different time periods. A legend defines key terms such as nominal interest rate, number of periods, effective annual rate, and periodic payments.

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MD Abrar Faiyaz
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5K views2 pages

Time Value of Money Formula Sheet

This document provides a summary of common time value of money formulas. It lists 11 formulas used to calculate future value, present value, annuities, perpetuities, interest rates, time periods, and growing/declining cash flows under various compounding assumptions. The formulas can be used for lump sums, annuities, and perpetuities with annual, semi-annual, or continuous compounding over different time periods. A legend defines key terms such as nominal interest rate, number of periods, effective annual rate, and periodic payments.

Uploaded by

MD Abrar Faiyaz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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TIME VALUE OF MONEY FORMULA SHEET

Compounded (m) Times Continuous


# TVM Formula For: Annual Compounding
per Year Compounding

Future Value of a
1
Lump Sum. (FVIFk,n)
FV = PV( 1 + k )n FV = PV  1  k/m  nm FV = PV(e )kn

Present Value of a
2 PV = FV( 1 + k )-n PV = FV( 1 + k/m )-nm PV = FV(e )-kn
Lump Sum. (PVIFk,n)

Future Value of an  ( 1 + k ) n - 1  ( 1 + k/m ) nm - 1


3 FVA = PMT   FVA = PMT  
Annuity. (FVIFAk,n)
 k   k/m 
Present Value of an 1 - ( 1 + k ) -n
1 -  1 + k/m  
-nm

4 PVA = PMT   PVA = PMT  


Annuity. (PVIFAk,n)
 k   k/m 
Present Value of PMT PMT
5 PVperpetuity  PVperpetuity 
Perpetuity. (PVp) k [(1  k)1/m  1]

Effective Annual
6
Rate given the APR. EAR = APR EAR = (1  k/m) m - 1 EAR = ek - 1

The length of time ln (FV/PV) ln ( FV/PV) ln (FV/PV)


7 required for a PV to n= n= n=
grow to a FV. ln (1 + k ) m * ln (1  k/m) k

The APR required for


 FV 
1/n  FV 1/(nm)  ln (FV/PV)
8 a PV to grow to a k=  -1 k = m *   - 1 k=
FV.  PV   PV   n

CF0 1  g    1  g  
n
Present Value of a
PV  1  
k  g    1  k  
9
Growing Annuity.

The length of time


required for a series  (FVA)(k)   k  FVA m 
ln  + 1 ln   + 
10 of PMT’s to grow to  PMT   m  PMT k 
n= n=
a future amount ln (1 + k) m * ln (1  k/m) 
(FVAn).

 (PVA)(k)   (PVA)(k/m) 
The length of time ln 1  ln 1 
PMT  PMT 
required for a series
n  n  ,
m * ln(1  k/m) 
11 of PMT’s to exhaust ,
ln (1  k)
a specific present
amount (PVAn).
for PVA(k) < PMT for PVA(k/m) < PMT

Legend
k = the nominal or Annual Percentage Rate n = the number of periods
m = the number of compounding periods per year EAR = the Effective Annual Rate
ln = the natural logarithm, the logarithm to the base e e = the base of the natural logarithm ≈ 2.71828
PMT = the periodic payment or cash flow Perpetuity = an infinite annuity

Prepared by Jim Keys


TIME VALUE OF MONEY FORMULA SHEET

Prepared by Jim Keys

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