Frequently asked questions
What is the Time Value of Money?
The Time Value of Money (TVM) is the principle that a sum of money today is worth more than the same sum in the future, because money available now can be invested and earn a return. This calculator uses the standard TVM equation to relate five variables: present value, future value, payment, rate, and number of periods.
Should I use the sign convention for PV and PMT?
In formal TVM equations, cash outflows are negative and inflows are positive. This calculator uses positive values for simplicity. Enter all amounts as positive numbers. The mode you select determines whether you're solving for what you'll receive or what you need to pay.
What is the difference between ordinary annuity and annuity due?
An ordinary annuity makes payments at the end of each period (most loans and investments). An annuity due makes payments at the beginning (like rent or a savings deposit at the start of the month). Annuity due results in slightly more growth because each payment has one extra period to compound.
Why does solving for rate sometimes fail?
The rate solver uses an iterative numerical method. It can fail if the cash flows are inconsistent (for example, a positive PV, positive PMT, and positive FV with no outflow) or if no real positive rate satisfies the equation. Ensure your inputs represent a realistic financial scenario.
How do I convert between annual and periodic rates?
The calculator handles this automatically. Enter your annual nominal rate and select the correct periods-per-year. The periodic rate is the annual rate divided by the number of periods per year. For example, 6% annual with monthly periods gives a periodic rate of 0.5%.
Can I use this for loan amortization?
You can find the payment amount for a loan using the 'Payment' mode. Enter the loan amount as PV, set FV to 0 (fully repaid), enter the annual rate and total number of monthly periods. For a full amortization schedule with principal/interest breakdown, use a dedicated loan calculator.