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  • Time Value of Money Formulas

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    Qasim Saleem
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    This document outlines common time value of money formulas for calculating future value, present value, simple interest, compound interest, and annuities using interest rates and time periods. It includes formulas for simple interest, compound interest, ordinary annuities, annuities due, and effective annual interest rates when interest is compounded more frequently than annually. Tables are referenced for present and future value interest factors.

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    This document outlines common time value of money formulas for calculating future value, present value, simple interest, compound interest, and annuities using interest rates and time periods. It includes formulas for simple interest, compound interest, ordinary annuities, annuities due, and effective annual interest rates when interest is compounded more frequently than annually. Tables are referenced for present and future value interest factors.

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    © All Rights Reserved
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    5 views1 page

    Time Value of Money Formulas

    Uploaded by

    Qasim Saleem
    This document outlines common time value of money formulas for calculating future value, present value, simple interest, compound interest, and annuities using interest rates and time periods. It includes formulas for simple interest, compound interest, ordinary annuities, annuities due, and effective annual interest rates when interest is compounded more frequently than annually. Tables are referenced for present and future value interest factors.

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    © All Rights Reserved
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    Time Value of Money Formulas

    Simple Interest Formula PVAn = R (PVIFAi%,n) See Table


    SI = P0 (i)(n) Annuity Due
    FV = P0 + SI FVADn = R (FVIFAi%,n)(1+i)
    See Table

    PVADn = (1+i) (R) (PVIFAi%,n)


    Compound Interest See Table
    Formula
    Future Value calculation Compounding
    FVn = P0 (1+i)n FVn = PV0 (1 + [i/m])mn
    FVn = P0 (FVIFi,n) See table Annually divide by 1
    Present Value calculation Semiannual divide by 2
    Quarterly Divide by 4
    PV0 = FVn / (1+i)n
    Monthly divide by 12
    PV0 = FVn (PVIFi,n) See Table
    Daily divide by 365

    Annuities
    Effective Annual Interest
    Ordinary Annuity Rate
    FVAn = R (FVIFAi%,n) See Table
    (1 + [i / m])m - 1

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