Time Value of Money

The time value of money (TVM) is the concept that money available at the
present time is worth more than the identical sum in the future due to its
potential earning capacity.

PV of 1 (Present Value of a Single Amount/Lump Sum)

PV Factor Computation
Ordinary Calculator Scientific Calculator
Enter 1+% (1+%)^-(number of periods)
Press division sign twice
Press equal sign for number of periods

Present Value is the current peso value of a future amount-the amount of money that would have to be
invested today at a given interest rate over a specified period to equal the future amount.

Discounting cash flows is the process of finding present values.

FV of 1 (Future Value of a Single Amount/Lump Sum)

FV Factor Computation
Ordinary Calculator Scientific Calculator
Enter 1+% (1+%)^number of periods
Press multiplication sign twice
Press equal sign for number of periods minus 1

Future value is the value at a given date of an amount placed on deposit today and earning interest at a
specified rate.

Compound interest is earned on a given deposit and has become part of the principal at the end of a
specified period.

Principal is the amount of money on which interest is paid.