Time Value of Money Formula Sheet

Symbols:

PV = Present value, what future cash flows are worth today

FV = Future value, what cash flows are worth in the future

r = interest rate, rate of return, or discount rate per period – typically, but not always, one year

n = number of periods – typically, but not always, the number of years

C = cash amount

Basic Time Value Calculations

How much will I receive in the future if I investment certain amount today? (compounding)
- FV = PV(1 + r)ⁿ
How much do I have to invest today to have some amount in the future? (discounting)
- PV = FV / (1 + r)ⁿ
What is the implied interest rate in an investment?
- r= (FV / PV)^1/n – 1, or
How to find the number of time periods?