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Time Value of Money Formula List

This document discusses time value of money concepts and formulas. It defines formulas for future value, present value, future value annuity, present value annuity, and effective interest rate. It also provides the formula for calculating equal monthly installments to pay off a loan of principal over time at a given interest rate.

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tushar negi
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Download as DOCX, PDF, TXT or read online on Scribd
339 views

Time Value of Money Formula List

This document discusses time value of money concepts and formulas. It defines formulas for future value, present value, future value annuity, present value annuity, and effective interest rate. It also provides the formula for calculating equal monthly installments to pay off a loan of principal over time at a given interest rate.

Uploaded by

tushar negi
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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TIME VALUE OF MONEY

Future Value=P ×( 1+ r)n

Where P is present value; r is rate of interest; and n is number of years

F
Present Value=
(1+r )n

Future Value Annuity of Re. 1


n
❑
FVA ( r , n ) =∑ (1+r )n
1

Future Value Annuity Factor at r% for n years,

(1+r )n−1
FVA ( r , n ) =
r

Present Value of Annuity of Re. 1,


n
1
PVA ( r , n ) =∑
1 (1+r )n

Present Value Annuity Factor at r% for n years

(1+r )n−1
PVA ( r , n ) =
r (1+r )n

Future Value with Quarterly/monthly Type equation here .compounding

r mx n
F=P X (1+ )
m

Present Value

F
P= m xn
( 1+ r /m)

Effective Interest Rate

r m
[
EIR= (1+
m
) −1]
EMI calculation:

1
[1− ]
r n Xm
(1+ )
m
PVIFA r , nm=
r
m

Where r is rate of interest, n is number of years, m is number of months in a year.

To get the actual EMI = Loan Amount/PVIFA

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