What is Time Value of Money?
Time Value of Money (TVM) is the concept that the value of money itself changes over time. Having a dollar today is worth more than a dollar tomorrow. Solving for present value, future value, amount, interest rate and term are some standard time value of money (Wikipedia) calculations. The UFC is capable of performing any of these calculations with regular or irregular amounts as of any date for investment, savings or loan cash flow.
Time value of money example
As a time value of money calculator, UFC can calculate unknown amounts for complex and irregular cash flows. The below example answers the question, "How much do I need to invest for 48 quarterly periods to have a total future value that will then let me withdrawal $1,000 monthly for 180 months?"
To answer this question, set the calculator up as shown:
Time value of money unknown cash flow setup
TVM calculator showing unknown investment cash flow amount result
If you are someone who regularly needs to do TVM calculations, then it is worth your time to study the features this calculator offers. It can replace easily three-quarters of the calculators found on this site — and on other websites too!
Calculator's Features
Solve for any unknown
- Payment or loan amount
- Deposit or withdrawal
- Yields: APR, APY or IRR
- Balance as of a specific date
- Date a specific balance is reached *
- Present value (PV)
- Future value (FV)
- Balloon payment amount
- Payment required to reach a specific balloon
- Number of payments
- Interest rates - nominal or effective *
- Discounted values
- Remaining balance
- Deposit required
Any type of calculation method
- Normal amortization or investment
- Rule-of-78s
- Canadian methods
- US Rule — simple interest
- Supports 360, 364 and 365 day years
- Exact day or periodic interest calculations
Scheduled (but adjustable) Payment Frequencies
- Daily
- Weekly
- Bi-weekly
- Twice monthly (Half-month)
- Every 4 weeks
- Monthly
- Bi-monthly (every two months)
- Quarterly
- Every 4 months
- Semi-annual
- Annual
* Feature only available in C-Value! ™,
our cash flow calculator for Windows™
Flexible Reports & Schedules
- Amortization & investment schedules
- Schedules with details or totals only *
- Custom headers and labels *
- Change fonts, colors *
- Select a fiscal year end *
- Reg. Z APR disclosure report *
Handles any type of cash flow
- Normal
- Interest only
- Enter your own payment amount
- Negative amortization
- Skipped payments or deposits
- Fixed principal + interest
- Percent step amounts
- Dollar step amounts
- Balloon payments
- Extra payments — principal only
- Payments to interest
- Cash flow amounts set to any random date
Compounding Frequencies
- Exact day simple
- Daily compounding
- Weekly
- Bi-weekly
- Twice monthly (Half-month)
- Every 4 weeks
- Monthly
- Bi-monthly (every two months)
- Quarterly
- Every 4 months
- Semi-annual
- Annual
- Continuous
- Change the frequency of compounding during a cash flow
- No compounding option when rate changes
Using UFC as a Mortgage or Loan Payoff Calculator
A well-designed loan payoff calculator will answer any of these questions:
- How many payments do I have left?
- When will my loan be paid off if I make extra payments?
- What payment is required to pay a loan off by a given date?
- The borrower missed payments, paid late and paid additional amounts and there were interest rate changes, what is the exact loan balance due as of today?
Answering the first three questions is straightforward and takes but a second, but, as you may have guessed, calculating the payoff amount for the fourth scenario is more involved. For instructions on how to use the UFC as a tool for tracking a mortgage or loan balance with payment and interest rate changes, read my tutorial Calculate Loan Balance — Loan Payoff Calculation.
Mortgage or loan payoff examples
If you want to know how many payments are left or when the last payment is due, enter the current interest rate (4% for our example) and set compounding. Then in row one, enter the last known loan balance and the balance as of date ($250,000 and Sept. 1). In the 2nd row enter the due date of the next payment after the loan balance date in row one (this may also be the balance date), enter the scheduled payment amount, set "#Periods" to "Unknown" and set the payment frequency (monthly). Your screen will look like this:
Loan payoff calculator setup
After clicking "Calculate," your screen should look like below. There are 143 remaining payments, and the last payment will be due on August 1.
Loan payoff result showing payments remaining and due date of the last payment.
Now, let's delve in a bit deeper. You plan to pay an extra $150 a month on your mortgage, and you want to know the payoff date. The UFC excels as an early payoff calculator. If we use the above example, all you need to do is change the payment amount to $2,350.00 and set "#Periods" to "Unknown" again.
Example showing early loan or mortgage payoff calculator setup
Click "Calculate" once again. Your screen should look like below. Now only 132 payments are remaining, and the last payment will be due on September 1 a year earlier.
Early payoff result showing payments remaining and due date of the last payment.
Now, if you're lucky, the mortgage is paid off just as the first child is going off to college. :-)
NOTE: You can also specify the number of remaining payments and set the amount to "Unknown" in row two and the calculator will calculate the total payment amount required to have the loan paid off in the number of payments you specify.
Financial Calculations Step-by-Step Tutorials
The below tutorials walk you through the steps for setting up the indicated financial calculation. I recommend that you right click on a link and select "Open in New Window" so you can have the calculator handy in this window as you read.
- Calculate Payment
- loan or mortgage periodic payment calculation
- also an introduction to this calculator
- Investment Cash Flow
- Calculate Income From An Investment
- How to calculate income you can expect from an investment
- Adjustable Rate Mortgage or Loan
- ARM with interest rate changes on any date you desire
- Calculate a Loan's Term
- How to solve for an unknown number of payments
- Calculate Loan Amount
- Balloon Payment Calculation
- Calculate the balloon amount
- Balloon Loan Calculation
- Calculate the periodic payment required to result in a specified balloon
- Random Extra Principal Payment
- How to prepay principal on any date
- Loan with Series of Extra Principal Payments
- How to calculate loan or mortgage with extra payments
- Construction Loan
- Generally a short term loan with multiple borrows
- Monthly Skipped Payments
- Loan or mortgage with scheduled skipped payments
- Odd Length First Period
- Interest payment options for initial period
- Interest Only Loan
- Initial series of interest only payments
- Biweekly Mortgage Payments
- Pay 1/2 the monthly payment every other week to reduce the total interest paid
- US Rule
- No interest charged on interest — separate tracking of interest balance
- How much do I have to save or invest?
- State your goal - calculate periodic investment amount needed to reach goal
- Paying for College
- You may have longer than you think
- Multiple investments with multiple, overlapping withdrawals
- Demonstrates solving for unknown in complex cash flow
- Future Value Calculation
- How to set up simple or complex cash flows to calculate FV
- Present Value Calculation
- How to discount a simple or complex cash flow to find its PV
- Calculate PV of Fixed Principal + Interest Loan
- Calculate PV of the declining payment amount
- Demonstrates the cash flow analytics of this calculator
- Calculate Rate of Return (ROR) on Annuity
- How to set up an annualized ROR calculation
- Calculate Time It Takes to Reach Investment Goal
- Set a goal and see how long it takes to reach it
- Calculate ROI for X Days
- Exact day return on investment calculation
- Calculate Loan Balance — Loan Payoff Calculation
- Enter payments for any amount on date made — audit balance due
Calculators the Ultimate Financial Calculator Replaces
With this calculator's flexibility, it will meet the needs of anyone searching for:
- loan repayment calculator
- loan payoff calculator
- mortgage payoff calculator
- repayment calculator
- student loan repayment calculator
- home loan repayment calculator
- car loan repayment calculator
- debt payoff calculator
- early mortgage payoff calculator
- debt repayment calculator
- individual or specialty TVM calculators
Tell us how you use the Ultimate Financial Calculator. And naturally, if you have any questions, feel free to ask them below.
Invest or pay any amount, on any date, at any rate.
Buying an RV and the dealer is trying to show me the savings by financing through them. His offer is:
$25,131 loan @ 6.74% 180 months. ($222/month).
My credit union offers 3% for 72 months if I put a little extra down $24,131 loan @ 3% 72 months ($366/month)
He is trying to tell me that if I finance through them and yet make a payment of $366/month that I would be paying through my lender anyway ($222 + $144 additional each month), the loan will actually be paid off faster (69 payments) and will be less expensive than my credit union. He says this is because it is a simple interest loan and interest is compounded daily.
Using your calculator I am not finding this to be true. Using his method of extra payments, I am coming up with 88 payments and much more interest than if I went with my credit union. Either I am using the calculator incorrectly or this guy is trying to just get more $ out of me. Any thoughts? I am not “fluent” with financial numbers/terminology but I just cannot help but feel that I am being “had”. Any info you could provide would be appreciated. Thank you!
Your instincts are good. Think of it this way, When shopping for a loan, you are making a purchase. What are you buying? A loan. The cost of the loan is the interest due. If you are coming up with paying more interest to the dealer’s lender, then you certainly wouldn’t want to do that.
If you are not sure that you used the calculator correctly, then you’ll need to ask questions relating to your concerns.
Did you see the tutorials listed on this page about how you can enter extra payments?
I did see the tutorials and I believe did it correctly. Basically he sent me a screen shot of a TVM calculator he used that showed:
Present Value $-25131
Payment $366
Annual Rate 6.74%
Periods 69.11 months
Compounding Daily
Mode Beginning
I do not see how he comes up with 69 months.
When I input that same info on this calculator I come up with 87 months with total interest of $6,871. I guess my only concern was the whole “compounding daily” thing. Is that the same at your “initial compounding”? That is where I selected “Daily”
Getting the 3% loan for 72 months at $366/month through my bank I am only paying $2300 in interest. So I believe thats the way I will go.
Sorry for the confusion – this is all new to me and a little foreign. Thank you for your assistance.
A couple of things…
"Beginning Mode" normally means that the 1st payment is due on the same date that the loan originates, meaning on the day the money is borrowed. If that’s the case, using this calculator, the total interest would be $6,637. My guess is you had the 1st payment due one month after the loan date.
More importantly, I think I know what the dealer is doing. If you take the loan amount, $25,131 and divide by $366, you’ll get 68.66. Call that 69 months. The problem is, that’s not the way to solve for term because it’s not allowing for the interest to accrue!
Hopefully they are just ignorant about the calculation and not being outright dishonest.
Oh, and about the "Initial Compounding", I use that phrase to indicate to users that it is possible to change the compounding later in the cash flow stream. (See "Rate Change") In your case, set it to daily and I assume that does not change.
Thank you for all of your help. I am feeling better about my decision now.
What calculator would you recommend to calculate $200,000 as initial investment on 8-7-15, with a withdrawal on 8-22-16 of $70,000 and ending balance of $109,645 on March 27, 2018?
What’s the question you want to be answered? What you gave me seems to be the inputs, or am I missing something?
Thanks for your follow-up on the other web page.
If you want to calculate a rate-of-return for this cash flow using this calculator, follow these steps:
There is no need to click on the "Calc" button. The "Schedule" button also calculates.
Hi, thanks for this great site! I’ve learned so much, but I still don’t know which calculator to use to figure out whether the people buying a property from my dad under a real-estate contract are not paying him what he is owed or if the interest being charged is excessive. The escrow company is no help, they wouldn’t provide a payment or amortization schedule, but they did give me the entire payment history including date paid, interest paid, principal paid and new principal balance and new total balance. I tried using your loan payment calculator to figure out how much has really been paid and how much future payments should be. The buyer’s payment history has been very variable (to be nice about it) with late payments and occasional extra payments which have all gone toward interest. At one point there was a year of missed payments followed by a $5000 “make-up” payment. Since they “gave” their son the property, he has been making regular monthly payments, but he feels as I do that my dad might be owed some more money, but we don’t know how much and he says he is willing to make extra payments. My dad will probably agree to forgive money owed him if the son doesn’t pay money owed by his parents, but we still want to know. BTW they are friends of my dad and he really doesn’t want to ruin the relationship over a few grand and it is against our religion to sue people. Anyway, do you have a calculator that can produce a payment or amortization table from historical payment information, maybe a reverse engineering in which one plugs in date of payment, interest paid, principal paid and balance? I tried calculating this with the UFC as a loan repayment problem, but values don’t match the amounts paid and balance from Escrow company’s info. If there is a calculator please help me figure out how to use it: here are the loan terms: 70K at 5% p/a with daily interest and a $500 dollar monthly payment and “if not sooner paid pursuant to this contract, the entire balance due Seller shall be due and payable 30 yrs from effective date of the contract.
Thanks, Beverly, I’m happy to hear you’ve learned a lot.
If you want to find the exact balance of a loan, this calculator is the one to use. You can enter individual payments or a series of payments on the exact date made. Please scroll down the page and read tutorial #1 to get an overview of the calculator and then see tutorial #25 for a specific example of calculating the balance.
I am a bit confused with your question, however. Are you saying there is escrow amount paid as well? If so, you’ll want to ignore them for the purposes of calculating the balance on a loan.
Escrow payments should be tracked separately from the loan. This calculator has no provision for entering escrow payments. You could keep the payments and disbursements in a spreadsheet.
Hi Karl,
I’m trying to use your UFC to reconcile a home mortgage with a redraw facility.
The initial funding amount was settled mid-month(17-Nov), but the interest calculation is done at end of month (31-Nov), with the first repayment due one month after initial settlement (15-Dec).
Initial funding amount was $345,500
Interest rate is 3.79%
Bank charged interest of $502.25 on 30-Nov
Loan repayment of $1607.36 made on 15-Dec (this is the required periodic payment monthly)
Bank charged interest of $1110.91 on 31-Dec
Closing balance on 31-Dec was $345,505.80
How do I handle this situation with your calculator to ensure bank reconciliation?
Thank you,
Bronwyn
Hi Bronwyn, it looks to me as if you’ll be glad you double checked. I think the interest amount is too high.
I do have a couple of questions though, so I might be wrong. On Nov. 30th, the bank is just posting the accrued interest charge I assume. That is, you are not making an interest-only payment. If that’s the case, you set up the calculation this way:
Don’t forget to enter the required values in the top part of the calculator.
Does that at least get you started?
Thank you so much Karl!
Your assumptions were correct and I was accepting the payment amount as this is the contracted value.
When I added in subsequent payments for January and February, and then the interest accruals, the balances shown (between the UFC and my bank statement) are within a few dollars, so I think it’s probably just a timing issue. I’m ok with that.
I’ll definitely be using your UFC going forward to keep my bank honest! I’ve bookmarked your page. I wish I had this for the last 20 years of home loans!
Thanks again for your help.
Bronwyn
You’re welcome.
Interesting though that you get only a couple dollars difference. I had about $30. Perhaps I had a typo.
Since you get only a few dollars difference, if you’re interested, you can probably back into the same number the bank gets by changing either the "Initial Compounding" or, under the "Settings" menu, the number of days per year i.e. 360, 364 or 365.