Time Value of Money Concepts

VARIABLES

Compound Interest

  • PV - present value
  • FV - future value
  • i - interest rate (the nominal annual rate)
  • n - number of compounding periods in the term
  • PMT - periodic payment
  • m - compounding frequency (compounding intervals per year)
  • Y - number of years in term

Simple Interest

  • P - principal (analogous to PV)
  • S - amount (analogous to FV)
  • r - interest rate (analogous to i)
  • t - time (analogous to n)
  • I - interest earned

SIMPLE INTEREST

Present Value (PV) - Simple Interest

  (1.01)

Discount Factor - Simple Interest

  (1.02)

Future Value (FV) - Simple Interest

  (1.03)

Accumulation Factor - Simple Interest

  (1.04)

Simple Interest Amount (I)

  (1.05)

Time - Exact (t)

  (1.06)

Time - Ordinary (t)

  (1.07)


SINGLE SUM

Present Value (PV) - Single Sum

  (2.01)

Discount Factor - Compound Interest

  (2.02)

Continuous Compounding (PV) - Present Value

  (2.03)

Future Value (FV) - Single Sum

  (2.04)

Accumulation Factor - Compound Interest

  (2.05)

Continuous Compounding (FV) - Future Value

  (2.06)

Number of Periods (n) - Single Sum

  (2.07)

Interest Rate (i) - Single Sum

  (2.08)


ANNUITY

Present Value (PV) - Ordinary Annuity

  (3.01)

Number of Periods (n) - Present Value of Annuity

  (3.02)

Payment (PMT) - Present Value of Annuity

  (3.03)

Interest Rate (i) - PV Annuity

  (3.04)

Future Value (FV) - Ordinary Annuity

  (3.05)

Number of Periods (n) - Future Value of Annuity

  (3.06.)

Payment (PMT) - Future Value of Annuity

  (3.07)

Interest Rate (i) - FV Annuity

  (3.08)

Annuity Due

  (3.09)

Perpetuity (PV Annuity)

  (3.10)


INTEREST RATE

Interest Rate (i) - Effective

  (4.01)

Continuous Compounding (i) - Max Effective Interest Rate

  (4.02)


ALGEBRA

Natural Logarithm - Base Identity

  (5.01)

Natural Logarithm - Inverse

  (5.02)

Exponential Equation

  (5.03)

Fractional Exponent

  (5.04)

Receiprocal Exponent

  (5.05)


BONDS

Yield on Discount Basis (YDB)

  (6.01)

Bond Equivalent Yield (BEY) for t <= 182

  (6.02)