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Time Value of Money Formula Sheet

This document provides a comprehensive formula sheet for the Time Value of Money (TVM), detailing various calculations for future and present values of lump sums, annuities, and perpetuities under different compounding conditions. It includes formulas for both annual compounding and continuous compounding, as well as effective annual rates and growth calculations. Key variables such as interest rates, number of periods, and payment amounts are defined for clarity.

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AJ PREMSSON
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167 views1 page

Time Value of Money Formula Sheet

This document provides a comprehensive formula sheet for the Time Value of Money (TVM), detailing various calculations for future and present values of lump sums, annuities, and perpetuities under different compounding conditions. It includes formulas for both annual compounding and continuous compounding, as well as effective annual rates and growth calculations. Key variables such as interest rates, number of periods, and payment amounts are defined for clarity.

Uploaded by

AJ PREMSSON
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/Payments ContinuoUs
TVM Formula For: Annual Compounding (m) Times per Year Compounding

1
Future Value of a
FV =PV(1+i)' FV= PV(1+i/m) FV= PV(ey
Lump Sum. (FVIFin)

Present Value of a PV = FV(e)"


2 PV=FV(1+i)" PV=FV(1+im) -nm
Lump Sum. (PVIFin)
nm
Future Value of an FVA= PMT
(1+i)' -1| FVA= PMT
(1+im)
3
Annuity. (FVIFAin) i i/m
\-nm

4
Present Value of an
PVA= PMT
1-(1+i)" PVA= PMT 1-(1+im)"
Annuity. (PVIFALn) i/m

Present Value of PMT PMT


5 PVperpetuiy PVperpetuity [(1+i)m-1]
Perpetuity.(PV:) i

Effective Annual EAR =APR EAR=(1+im)"- 1 EAR =-1


6
Rate given the APR.

The length of time le(FVPV) In (FV/PV) In (FV/PV)


7 required for a PV to n=: n=

grow toaFV. o1+i) m * In (1+im) i

The APR required for In (FV/PV)


a PV to grow to a -1 i= m * -1
n
FV.

Present Value of c PV= CE,(1+8),(+g


Growing Annuity. (i-s)
The length of time
required for a series CEVAX) +1 In
iFVA, m
10 of PMT's to grow to PMT PMT
n= n=
afuture amount
(FVAn).
In (1+i) m*[n (1+im))
In 1-PVA)(/m)7
The length of time
required for a serles
In 1 (PVA)X)
PMT PMT
11 of PMT's to exhaust n=- n=-:
aspecltic present In (1+i) m* [In(1+im)
amount (PVAn). for PVA(i) < PMT for PVA(/m) < PMT

Legend
i= the nominal or Annual Percentage Rate n=the number of periods
m= the number of compounding periods per year EAR = the Effective Annual Rate
In =the natural logarithm, the logarithm to the base e e =the base of the natural logarithm 2.71826
PMT = the periodic payment or cash flow Perpetuity =an infinite annuity

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