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- Present Value -- Given the Payment, Interest Rate, Duration and Future Value, how much do I need to deposit
today?
- Payment -- Given the Initial Value, Interest Rate, Duration, Future Value & Payment Mode, how much
do I have to deposit starting today?
- Interest Rate -- Given the Initial Value, Payment, Duration and Future Value, what nominal interest rate
(not considering income taxes) will I have to earn?
- Time Period [Years and Months] -- Given the Initial Value, Payment, Interest Rate and Future Value, how
long will it take if I start today?
- Future Value -- Given the Initial Value, Payment, Interest Rate and Duration, how much will I accumulate?
Calculation Type - Present Value calculations typically occur on a mortgage, a loan or an immediate annuity
that makes payments to you. Future Value calculations would typically be associated with saving plans for retirement or
other periodic investment deposits.
Timing of Payments - Payments can occur at the beginning of each payment period or at the end of each payment
period. For example, a residential mortgage (and most other loans) typically have a payment that occurs at the end of each
payment period.
Payment Mode - Select the appropriate payment mode.
Interest Compounding Periods - Select the number of times per year that interest is compounded. If interest
is compounded only once per year, then the Nominal Rate and the Annual Percentage Rate will be equal.
Beginning Value - The initial or starting value. This would also be the mortgage or loan balance.
Modal Payment - Enter the payment amount. For $100 per month, enter 100 and set the payment mode to monthly.
Interest Rate - The Annual Percentage Rate takes into account the frequency of interest compounding. Most
mutual funds, Certificates of Deposit, etc. state interest as an Annual Percentage Rate. Most mortgage loans state the Nominal
Interest Rate. The Annual Percentage Rate is typically on the loan disclosure form. For example, a 6.5% Nominal Interest
Rate with interest compounded monthly results in a 6.6972% Annual Percentage Rate. If interest is compounded once per year,
the Nominal Rate and the Annual Rate are equal.
Duration - Select the appropriate number of years/months in the plan.
Ending Value - The amount that I want to have in the future. For a mortgage of loan, this would
typically be zero or the amount of the balloon payment due at the end of a stated number of years.
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