Present Value =

Future Value =

Payment =

Interest/Year =

Periods =

Continuous Time Value of Money (TVM) assumes payment periods per year and interest compounding per year is continuous.

- Present Value: Current value of the annuity.

- Future Value: Future value of the annuity.

- Payment: Periodic payment for the annuity.

- Interest/Year: Interest per year as a percentage. For example, 8.25% interest should be entered as '8.25'.

- Periods: Number of total payment periods.

To further understand the cash flow model, here is an example of a timeline. Note that inflows of cash are treated as positive amounts (designated by no sign or a [+] sign) and outflows of cash as negative amounts (designated by a [–] sign).

[https://poweronecalc.s3.amazonaws.com/templates/tvm_loan.png | loan example]

In Time Value of Money problems the interval between cash flows are always the same and the payment amounts are always the same. In this example, the borrower receives an initial, Present Value (PV) amount followed by subsequent payments (PMT) made back to the lending institution, each an equal distance of time apart (say, one month). This is a typical loan or mortgage scenario.

Lease Example:

[https://poweronecalc.s3.amazonaws.com/templates/tvm_lease.png | lease example]

Investment Example [DEP=deposit, FV=future value]:

[https://poweronecalc.s3.amazonaws.com/templates/tvm_investment.png | investment example]

Balloon Payment Example:

[https://poweronecalc.s3.amazonaws.com/templates/tvm_balloon.png | balloon payment example]

A $50,000 loan at 5.5% interest that is to be repaid monthly over 15 years compounds and accrues interest continuously. What is the monthly payment?

- Present Value: 50,000.00

- Future Value: 0.00

- Interest/Year: 5.5%

- Periods: 180.0 [15 years * 12 months/year]

Select "=" on Payment row. The monthly payment is -2,750.14.

Present Value

Future Value

Payment

Interest/Year

Periods

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Time Value of Money