Time Value of Money Calculator

Why Time Value of Money Matters

Time Value of Money (TVM) is the concept that a dollar today is worth more than a dollar in the future due to its earning potential. This principle is foundational in finance, investing, and retirement planning.

How to Use This Calculator

Enter either the present value or future value (or both), along with the interest rate and time period. The calculator uses compound interest to show how money grows or what a future amount is worth today.

The TVM Formulas

Where:

• FV = Future Value
• PV = Present Value
• r = Annual interest rate
• n = Number of compounding periods per year
• t = Time in years

Real-World Applications

• Investing: Estimate how much $10,000 will grow in 20 years at 7% interest
• Retirement: Calculate how much you need to save today to reach $1M
• Loans: Understand the true cost of borrowing over time
• Business Decisions: Compare project returns using net present value (NPV)

Example

If you invest $5,000 at 6% annual interest compounded monthly for 15 years, it will grow to $12,216.09. This shows the power of compounding.