How to Use the TVM Calculator

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The TVM (Time Value of Money) Calculator is a powerful financial tool designed to solve problems involving compound interest, such as loans, mortgages, leases, and savings plans. It works by solving for one unknown variable based on the other known variables.

Understanding the Variables

N (Number of Payments)
The total number of payment periods. For a 5-year monthly loan, N = 5 × 12 = 60.
I/Y (Interest Rate per Year)
The annual nominal interest rate as a percentage. Enter 5 for 5%, not 0.05.
PV (Present Value)
The current value of the money. This is the starting principal. For a loan, this is the amount you receive (positive). For an investment, this is the amount you deposit (negative).
PMT (Payment)
The payment amount made each period. Payments you make are negative; payments you receive are positive.
FV (Future Value)
The value of the money at the end of the term. For a loan that is paid off, FV is 0. For a savings account, it is the final balance (positive).
P/Y (Payments per Year)
The number of payment periods per year. Monthly = 12, Annual = 1, etc.
C/Y (Compounds per Year)
The number of times interest is compounded per year. Often the same as P/Y, but can be different.
Sign Convention: Cash inflows (money you receive) are positive (+). Cash outflows (money you pay) are negative (-).

Examples

Example 1: Auto Loan

You want to buy a car for $25,000. You can get a 5-year loan at 4.5% annual interest. What will your monthly payment be?

Steps:

  1. Set P/Y and C/Y to 12 (Monthly payments and compounding).
  2. Enter the known values as shown below.
  3. Click the Solve button next to PMT.
N = 60 (5 * 12)
I/Y = 4.5
PV = 25000
PMT = -466.08
FV = 0
P/Y = 12
C/Y = 12

*Result is negative because it is a payment you make.

Example 2: Savings Plan (Different P/Y and C/Y)

You decide to deposit $200 at the end of every month into a high-yield savings account for 10 years. The account pays 6% annual interest, but interest is compounded daily. How much will you have?

Steps:

  1. Set P/Y to 12 (Monthly deposits).
  2. Set C/Y to 365 (Daily compounding).
  3. Enter the known values. PV is 0 because you start with nothing. PMT is -200 (money leaving your pocket).
  4. Click the Solve button next to FV.
N = 120 (10 * 12)
I/Y = 6
PV = 0
PMT = -200
FV = 32,801.73
P/Y = 12
C/Y = 365

*Result is positive because it is money available to you.

How to Solve

  1. Enter all the known values for your problem.
  2. Make sure to set the correct P/Y and C/Y settings.
  3. Click the "Solve" button corresponding to the variable you want to find.
  4. The calculated value will appear in the field, highlighted in green.