N

u
m
b
e
r
Time Value of
Money Formula
For:
Annual Compounding
Compounded (m) Times
per Year
Continuous
Compounding
1
Future Value of
a Lump Sum.
( FVIFi,n )
) + 1 ( V P = V F
n
i
,
_

m
i
nm
+ 1 PV = FV ) PV( = FV
in
e
2
Present Value of
a Lump Sum.
( PVIFi,n )
) + 1 ( FV = PV
-n
i
,
_

m
i
nm
+ 1 FV = PV
-
) FV( = PV
-in
e
3
Future Value of
an Annuity.
( FVIFAi,n )
1
]
1

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

m i
m i
PMT
nm
/
1 ) / ( 1
FVA
4
Present Value of
an Annuity.
( PVIFAi,n )
1
]
1

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

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

m
i
PMT
6
Effective Annual
Rate given the
APR.
APR = EAR 1 - + 1 = EAR
,
_

m
i
m
1 - = EAR
e
i
7
The length of
time required for
a PV to grow to
a FV.
) + (1 ln
(FV/PV) ln
=
i
n
( )
m
i
m
n
+ 1 ln *
FV/PV) ( ln
=
FV/PV) ( ln *
1
=
i
n
8
The APR
required for a PV
to grow to a FV.
1 -
PV
FV
=
/ 1

,
_

n
i
1
1
]
1

,
_

1 -
PV
FV
* =
) /( 1 nm
m i (FV/PV) ln *
1
=
n
i
9
The length of
time required for
a series of PMTs
to grow to a
future amount
(FVA).
) + (1 ln
1 +
) (FVA)(
ln
=
i
PMT
i
n
1
]
1

1
]
1

,
_

1
]
1

,
_

,
_

m
i
m
i
m
PMT m
i
n
+ 1 ln *
+
FVA
ln
=
1
0
The length of
time required for
a series of PMTs
to exhaust a
specific present
amount (PVA).
) 1 ( ln
) )( PVA (
1 ln
i
PMT
i
n
+
1
]
1

,
for PVA(i) < PMT
1
]
1

,
_

+
1
]
1

m
i
m
PMT
m i
n
1 ln *
) / )( PVA (
1 ln
,
for PVA(i/m) < PMT
Legend
i = the nominal or Annual Percentage Rate n = the number of periods
m = the number of compounding periods per
year
EAR = the Effective 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 flow Perpetuity = an infinite annuity
Prepared by Jim Keys