Business Math Topic: Time Value of Money

Future Value of Annuities and
Uneven Cash Flow Streams

Future Value of an Uneven Cash Flow by TeachMeFinance.com. Learn the concept through a simple example. First, the future value is calculated for each cash flow. Then, the amounts are totaled to obtain the future value of an uneven cash flow.

Finding the Future Value of an Uneven Cash Flow Stream (Calculator provided by Rock Mathis)

Type in the interest rate under "Nominal Rate" and then press the Enter key.
Select the compounding period from the "Compounding" menu.
Type in the number of periods under "When" (located below "Future Value") and then press the Enter key.
Type in the cash flows for each period as follows: First, click on the box under the "Cash Flow" column to the right of the period you are selecting (the box will change to a white color). Second, type in the cash flow amount for that period under "Cash Flows" and then press the Enter key.

As you enter the cash flows for each period, the "Future Value" total will be updated.

Future Value/Annuity Calculation by Hugh Chou. Find out whether a retirement plan is realistic by entering the following data:

Beginning balance of your account
Monthly contribution
Years until retirement
Estimated annual pre-retirement yield (%)
Estimated annual retirement yield (%)
Estimated annual inflation (%)
Estimated annual contribution increase(%)
Desired future monthly withdrawal amount (current dollars)

The calculator will then output two charts. One will show the following information for each year until retirement: monthly contribution (adjusted for estimated contribution increase), actual balance and current dollar balance (value of balance in today's dollars after adjusting downwards for inflation).

The second chart shows the value of your account for each subsequent year of retirement changes based on your desired monthly withdrawals in future dollars (desired withdrawal amount adjusted upwards for inflation). For example, the chart might reveal that you'll run out of money in just a few retirement years or long past the time you expect to live!

General Articles and Calculators Future Value Present Value Future Value of Annuities/ Uneven Cash Flow Streams Present Value of Annuities/ Uneven Cash Flow Streams Amortized Loans Types of Interest Rates	General Articles and Calculators (Covering More Than One "Time Value of Money" Category) Future and Present Value of Money by The Investment FAQ. Basic explanations of the future value and present value, including several examples to show how both are calculated. Time Value of Money Calculator by Rock Mathis. Enter four the following five variables to calculating the remaining one: present value, future value, annuity payment, number of periods and nominal interest rate. Time Value Calculators by Thomas C. Omer. Four calculators: Present Value. Calculates the present value factor (fractional amount) and present value amount based on your inputs for the amount to be received in the future, annual interest rate and number of times interest is compounded. Present Amount of Ordinary Annuity. Calculates present value factor and present value of annuity based on what you enter for the payment amount, interest rate and number of payments. Future Value. Calculates future value factor and future amount given the amount now, annual interest rate, number of times interest is compounded and number of years. Future Value of Ordinary Annuity. Calculates future value factor and future value of an ordinary annuity based on the payment amount, interest rate and number of payments.

	Future Value Future Value by Datachimp. This introduction to future value includes a calculator that outputs the future value given the starting principal, growth rate and years, as well as a bar chart showing how the principal appreciates on an annual basis.
	Present Value Present Value by Datachimp. This introduction to present value includes a calculator that outputs the present value given the future value, growth rate and years, as well as a bar chart showing how present value appreciates on an annual basis. Present Value Tables by Quicken.com. (Download 66K file in rich text format: "suitable for use with most word processing programs used in the Windows environment," such as Microsoft Word) "Present Value of $1 to be Paid in Future" Includes "an example of how the table can be used to calculate the net present value of a major project." "Present Value of a Series of $1 Payments to Be Paid in the Future" Includes "an example of how the table can be used to compute the Internal Rate of Return of a major project." Renting versus Buying a Home by The Investment FAQ. A practical application of present value is demonstrated in this detailed guide to calculating the true costs of renting versus buying a home. For example, the opportunity costs (what you might have earned investing your money elsewhere) of buying a home are factored by calculating the present value of the money you will pay over the term for the home.

	Future Value of Annuities and Uneven Cash Flow Streams Future Value of an Uneven Cash Flow by TeachMeFinance.com. Learn the concept through a simple example. First, the future value is calculated for each cash flow. Then, the amounts are totaled to obtain the future value of an uneven cash flow. Finding the Future Value of an Uneven Cash Flow Stream (Calculator provided by Rock Mathis) Type in the interest rate under "Nominal Rate" and then press the Enter key. Select the compounding period from the "Compounding" menu. Type in the number of periods under "When" (located below "Future Value") and then press the Enter key. Type in the cash flows for each period as follows: First, click on the box under the "Cash Flow" column to the right of the period you are selecting (the box will change to a white color). Second, type in the cash flow amount for that period under "Cash Flows" and then press the Enter key. As you enter the cash flows for each period, the "Future Value" total will be updated. Future Value/Annuity Calculation by Hugh Chou. Find out whether a retirement plan is realistic by entering the following data: Beginning balance of your account Monthly contribution Years until retirement Estimated annual pre-retirement yield (%) Estimated annual retirement yield (%) Estimated annual inflation (%) Estimated annual contribution increase(%) Desired future monthly withdrawal amount (current dollars) The calculator will then output two charts. One will show the following information for each year until retirement: monthly contribution (adjusted for estimated contribution increase), actual balance and current dollar balance (value of balance in today's dollars after adjusting downwards for inflation). The second chart shows the value of your account for each subsequent year of retirement changes based on your desired monthly withdrawals in future dollars (desired withdrawal amount adjusted upwards for inflation). For example, the chart might reveal that you'll run out of money in just a few retirement years or long past the time you expect to live!

	Present Value of Annuities and Uneven Cash Flow Streams Annuities by TeachMeFinance.com. Basic explanation of the present value of an annuity and how to figure it through either a financial calculator or an annuity table. Finding the Present Value of an Uneven Cash Flow Stream (Calculator provided by Rock Mathis) Type in the interest rate under "Nominal Rate" and then press the Enter key. Select the compounding period from the "Compounding" menu. Type in the cash flows for each period as follows: First, click on the box under the "Cash Flow" column to the right of the period you are selecting (the box will change to a white color). Second, type in the cash flow amount for that period under "Cash Flows" and then press the Enter key. As you enter the cash flows for each period, the "Present Value" total will be updated.

	Amortized Loans Loan Amortization Schedule by Mortgage University. Enter the loan amount, interest rate and years to obtain a complete loan amortization schedule.

	Types of Interest Rates Kinds of Interest Rates by TeachMeFinance.com. Definitions and how to calculate nominal rate, periodic rate and effective annual rate. Nominal and Effective Interest Rates by East West Mortgage Company. "Calculate what rates are necessary to achieve a desired future value amount given a present value amount and the time period over which to compound your investment."