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TIME VALUE OF MONEY FORMULA SHEET

#
TVM Formula For: Annual Compounding
Compounded (m) Times
per Year
Continuous
Compounding
1
Future Value of a
Lump Sum. (FVIF
k,n
)
) k + 1 PV( = FV
n
( ) k/m 1 PV = FV
nm
+ ) PV(e = FV
kn
2
Present Value of a
Lump Sum. (PVIF
k,n
)
) k + 1 FV( = PV
-n
) k/m + 1 FV( = PV
-nm
) FV(e = PV
-kn
3
Future Value of an
Annuity. (FVIFA
k,n
)
1
]
1

k
1 - ) k + 1 (
PMT = FVA
n
1
]
1

k/m
1 - ) k/m + 1 (
PMT = FVA
nm
4
Present Value of an
Annuity. (PVIFA
k,n
)
1
]
1

k
) k + 1 ( - 1
PMT = PVA
-n
( )
1
]
1

k/m
k/m + 1 - 1
PMT = PVA
-nm
5
Present Value of
Perpetuity. (PV
p
) k
PMT
PV perpetuity
1] k) [(1
PMT
PV
1/m
perpetuity
+

6
Efective Annual
Rate given the APR.
APR = EAR 1 - k/m) (1 = EAR
m
+ 1 -
e
= EAR
k
7
The length of time
required for a PV to
grow to a FV.
) k + (1 ln
(FV/PV) ln
= n
k/m) (1 ln * m
FV/PV) ( ln
= n
+
k
(FV/PV) ln
= n
8
The APR required for
a PV to grow to a
FV.
1 -
PV
FV
= k
1/n

,
_

1
1
]
1

,
_

1 -
PV
FV
* m = k
1/(nm)
n
(FV/PV) ln
= k
9
Present Value of a
Growing Annuity.
( )
( )
1
1
]
1

,
_

+
+

n
0
k 1
1
1
k
1 !F
PV
1
0
The length of time
required for a series
of PMTs to grow to
a future amount
(FVA
n
).
k) + (1 ln
1 +
PMT
(FVA)(k)
ln
= n
1
]
1

[ ] k/m) (1 ln * m
k
m
+
PMT
FVA
m
k
ln
= n
+
1
]
1

,
_

,
_

1
1
The length of time
required for a series
of PMTs to exhaust
a specifc present
amount (PVA
n
).
k) (1 ln
PMT
(PVA)(k)
1 ln
n
+
1
]
1


,
"#r PVA(k) $ PMT
[ ] k/m) ln(1 * m
PMT
(PVA)(k/m)
1 ln
n
+
1
]
1


,
"#r PVA(k/m) $ PMT
Prepared by Jim Keys
TIME VALUE OF MONEY FORMULA SHEET
Legend
k = the nominal or Annual Percentage Rate n = the number of periods
m = the number of compounding periods per year EAR = the Efective 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 fow Perpetuity = an infnite annuity
Prepared by Jim Keys

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