Time value of money

The time value of money is the idea that money available now is worth more than the same nominal amount later, because you can earn a return in the meantime (or avoid paying interest). Most personal and corporate finance tools—loans, bonds, mortgages, savings plans—assume you can move value through time using a rate.

The usual variables are PV (present value), FV (future value), N (number of periods), I/Y (interest rate per period), and sometimes PMT (a repeating payment). Discounting turns future amounts into today’s equivalents; compounding projects today’s money forward.

Use the calculators to experiment, and read formulas for the exact relationships used on this site.