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Present & Future Value Tutorial - Financial Calculator Guide

Calculate present and future values

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Calculate present value and future value of investments. Free PV/FV calculator for annuities, lump sums, and investment planning.

How to Use the Present & Future Value Calculator

  1. Press 2ND CLR TVM to clear all values
  2. Enter the number of periods (N)
  3. Enter the interest rate (I/Y)
  4. Enter known value (PV or FV)
  5. Enter payment amount if applicable (PMT)
  6. Press CPT and the unknown variable to solve

Understanding PV/FV Analysis

Present value (PV) shows what future money is worth today, while future value (FV) shows what current money will be worth later with compound interest. These fundamental concepts form the basis of all financial analysis, from retirement planning to investment valuation.

Key Concepts

  • Time Value of Money: Money today is worth more than the same amount in the future due to earning potential
  • Compound Interest: Interest earned on both principal and accumulated interest
  • Discounting: Converting future values to present values
  • Compounding: Converting present values to future values
  • Annuities: Series of equal payments at regular intervals

Formula & Variables

Future Value with Payments:
FV = PMT × [(1 + r)^n - 1] / r

Present Value of Annuity:
PV = PMT × [1 - (1 + r)^-n] / r

Simple Future Value:
FV = PV × (1 + r)^n
TVM Variables:
  • N: Number of periods (years, months, etc.)
  • I/Y: Interest rate per year (as percentage)
  • PV: Present value (current worth)
  • PMT: Payment amount per period
  • FV: Future value (final amount)
  • P/Y: Payments per year (default = 1 for annual)
Sign Convention:
  • Negative (-): Money paid out (investments, savings)
  • Positive (+): Money received (returns, withdrawals)

Example Calculations

Example: Annual Retirement Contributions

Scenario: You want to retire with $1,000,000 in 30 years. If you can earn 7% annually, how much should you contribute each year?

Step Input Display Description
1 2ND CLR TVM 0.00 Clear all TVM values to start fresh
2 30 N N= 30.00 30 annual contributions
3 7 I/Y I/Y= 7.00 7% annual return expected
4 0 PV PV= 0.00 Starting with no savings
5 1000000 FV FV= 1,000,000.00 Retirement goal
6 CPT PMT PMT= -10,586.36 Calculate annual contribution needed
Answer: $10,586.36 per year

The negative sign indicates money you contribute. With P/Y = 1 (default), the calculator correctly interprets N = 30 as 30 annual payments.

Understanding the Result

  • Total Contributions: $317,590.80 (30 × $10,586.36)
  • Investment Growth: $682,409.20 (from compound interest)
  • Final Value: $1,000,000.00
  • Growth Percentage: 215% return on contributions

Present Value Applications

You can also use this calculator to find present values. For example:

  • Lottery Winnings: What's the lump sum value of annual payments?
  • Investment Valuation: What's a future cash flow worth today?
  • Retirement Planning: How much do you need saved to generate income?
  • Loan Analysis: What's the true cost of borrowing?

Frequently Asked Questions

Use PV to determine how much future cash flows are worth today, essential for investment valuation and financial planning.

PV is the current worth of future money, while FV is what current money will be worth in the future. PV discounts future cash flows, FV compounds present amounts.

More frequent compounding increases future value. Monthly compounding yields more than annual compounding at the same nominal rate due to interest earning interest more often.

The calculator uses sign convention: negative for money paid out (like savings), positive for money received (like withdrawals). This helps track cash flow direction.

Yes! For lump sums, set PMT to 0. For regular payments without initial investment, set PV to 0. You can also combine both for complex scenarios.

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Disclaimer

This Financial Calculator is an independent, third-party tool provided by ryanoconnellfinance.com. It is not affiliated with, endorsed by, or connected in any way to Texas Instruments Incorporated or any of its products. All trademarks, including "BA II Plus," are the property of their respective owners. This tool is provided for educational and informational purposes only and should not be used for official examinations where specific hardware calculators are required. The accuracy of calculations is not guaranteed; verify all results.

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