N

m
b

Time Value of
Money Formula
For:

Annual Compounding

Compounded (m) Times per

Continuous

Year

Compounding

r
1
2
3
4
5
6

Future Value of a
Lump Sum. ( FVIFi,n )
Present Value of a

Lump Sum. ( PVIFi,n )

FV = PV 1 +
m

PV = FV ( 1 + i )-n

PV = FV 1 +
m

( 1 + i )n - 1
FVA = PMT

Present Value of an

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

Annuity. ( PVIFAi,n )
Present Value of a
Perpetuity.

Effective Annual

Rate given the APR.

The length of time
required for a PV to
grow to a FV.

PVperpetuity

a PV to grow to a
FV.

PMT
i

EAR = 1 +
m

ln (FV/PV)
n=
ln (1 + i )

FV

PV

i=

n=

of PMTs to grow to
a future amount

-1

required for a series

10

of PMTs to exhaust
a specific present
amount (PVA).

-1

1 /( nm )

EAR = e i - 1

n=

1
* ln ( FV/PV)
i

- 1

i FVA m
ln
+
m PMT i

n=

i
m * ln 1 +
m

(FVA)( i )
ln
+ 1
PMT

n=
ln (1 + i )

(FVA).
The length of time

PV = FV( e )-in

ln ( FV/PV)
i
m * ln 1
m

FV
i= m *

PV

1/ n

The length of time

required for a series

- nm

1 - 1 + (i / m) - nm
PVA = PMT

i/m

PMT
PVperpetuity
[(1 i )1/ m 1]

EAR = APR

The APR required for

FV = PV(e )in

1 (i / m) nm 1
FVA PMT

i/m

Future Value of an
Annuity. ( FVIFAi,n )

nm

F V = P V ( 1 + i )n

(PVA )(i )
ln 1
PMT ,
n
ln (1 i )

( PVA )(i / m)

ln 1

PMT
n
,

i
m * ln 1
m

for PVA(i) < PMT

for PVA(i/m) < PMT

Legend

i = the nominal or Annual Percentage Rate

n = the number of periods

Prepared by Jim Keys

1
i = * ln (FV/PV)
n

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