In our daily life, we often need to make some financial decisions and for which we might need to **calculate time value of money**. Microsoft Excel is quite powerful and versatile software. In Excel, we can **calculate time value of money **by following some simple steps. In this article, we are going to discuss **10 **suitable examples to **calculate time value of money in Excel**.

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## What Is Time Value of Money?

The core idea of the **time value of money **is that money that you have in your pocket today is worth more than money that you will receive in the future. Let me explain it with an example.

Letâ€™s say you can have **$200,000** at once today or you can have **$20,000 **for the next **10** years. In both cases, the total amount is **$200,000**. But the first one is worth more than the second one. Because you can **reinvest** the **$200,000** and **gain more profit** compared to the second option.

## Parameters to Calculate Time Value of Money

Letâ€™s familiarize ourselves with some parameters that we will use to **calculate the time value of money in Excel**.

**pv****â†’ pv**denotes the**Present Value**or simply the amount of money that you have right now.**fv â†’****fv**indicates the**Future Value**of the money that you have now.**nper â†’ nper**represents the**Number of Periods**. It is to be noted that, the**Period**can be**Annually**,**Semi-Annually**,**Quarterly**,**Monthly**,**Weekly**,**Daily**etc.**rate â†’ rate**is the**Rate of Interest Per Year**. You should keep in mind that before utilizing an interest rate in an Excel function, you must convert it to an**Annual Rate of Interest**whether it is given at monthly, quarterly, or any other intervals.**pmtÂ â†’Â pmt**indicates the**Periodic Payments**that are made. For example, to repay a loan you need to make periodic payments each month.In the Excel formula, the signs of*Note:***PV**and**FV**are opposite. Generally, the sign of**PV**is taken as negative and**FV**as positive.

## 5 Examples to Calculate Time Value of Money in Excel

In this section of the article, we will learn **5 **examples to **calculate time value of money**.

Not to mention that we have used *Microsoft Excel 365 *version for this article, you can use any other version according to your convenience.

### 1. Calculating Future Value

Firstly, we will see how we can **calculate Future Value in Excel**. **Future Value** is nothing but the future worth of money that you have currently.

In the following dataset, we have some initial investments (**Present Value**), respective **Annual Rate**, and the **Number of Years** of some **Account Holders**. We will calculate the **Future Value** by using the **FV function** of Excel.

#### 1.1 Future Value Without Periodic Payment

If there are no **periodic payments **to the initial investment, we will calculate the *Future Value *by following the steps mentioned below.

__Steps:__

- Firstly, enter the following formula in cell
**F5**.

`=FV(E5,D5,0,-C5,0)`

Here,**E5** â†’ **rate**

**D5**â†’

**nper**

**0 â†’ pmt**

**-C5 â†’ pv**

**0**â†’

**0**means payment is timed at the

**end of the period**.

- After that, press
**ENTER**.

Consequently, you will see the following output on your worksheet.

- By using Excelâ€™s
**AutoFill**feature, we can get the rest of the*Future Values*as shown in the following picture.

#### 1.2 Future Value with Periodic Payments

On the other hand, if there are **periodic payments **as marked in the image given below, we will calculate the *Future Value *by following the steps discussed below.

__Steps:__

- Firstly, insert the following formula in cell
**G5**.

`=FV(F5,D5,-E5,-C5,0)`

Here,**F5 â†’ rate**

**D5 â†’ nper**

**-E5 â†’ pmt**

**-C5 â†’ pv**

**0 â†’ 0**means payment is timed at the

**end of the period**.

- Following that, hit
**ENTER**.

Subsequently, you will see *Future Value* for **Peter **as marked in the image given below.

- Now, you can get the rest of the outputs by using the
**AutoFill**feature of Excel.

**Read More: ****How to Apply Future Value of an Annuity Formula in Excel**

### 2. Computing Present Value

In the following dataset, we have **Future Value**, **Annual Rate**, and **Number of Years** data for some **Account Holder**. We need to calculate the **Present Value**. To do this, we will use the** PV function** of Excel.

#### 2.1Â Present Value Without Periodic Payments

To compute the *Present Value* where there are no **periodic payments**, we will use the following procedures.

__Steps:__

- Firstly, enter the formula given below in cell
**F5**.

`=PV(E5,D5,0,-C5,0)`

Here,**E5 â†’ rate**

**D5 â†’ nper**

**0 â†’ pmt**

**-C5 â†’ fv**

**0 â†’ 0**means payment is timed at the

**end of the period**.

- Afterward, press
**ENTER**.

As a result, you will get the *Present Value* for **Peter** as marked in the following picture.

- Following that, use Excelâ€™s
**AutoFill**option to get the rest of the Present Values.

#### 2.2 Present Value with Periodic Payments

If there are **periodic payments** as shown in the below-given image, we will follow the steps mentioned below to calculate the *Present Value*.

__Steps:__

- Firstly, use the following formula in cell
**G5**.

`=PV(F5,D5,E5,-C5,0)`

Here,**F5 â†’ rate**

**D5 â†’ nper**

**E5 â†’ pmt**

**-C5 â†’ fv**

**0 â†’ 0**means payment is timed at the

**end of the period**.

- Next, hit
**ENTER**.

Consequently, you will see the following output on your worksheet.

- Following that, use the
**AutoFill**option to obtain the remaining*Present Values*for other*Accounts Holders*.

**Read More: ****How to Apply Present Value of Annuity Formula in Excel**

### 3. Calculating Interest Rate

For determining the **Interest Rate**, we can use the **RATE function** of Excel. In the dataset given below, we have **Present Value**, **Future Value**, and **Number of Years **data for some **Account Holders**. Now, we will find the *Interest Rate*.

#### 3.1 Interest Rate Without Periodic Payments

Firstly, letâ€™s learn the steps to calculate the *Interest Rate *if there are no **periodic payments**.

__Steps:__

- Firstly, enter the following formula in cell
**F5**.

`=RATE(D5,0,E5,-C5,0)`

Here,**D5 â†’ nper**

**0 â†’ pmt**

**E5 â†’ pv**

**-C5 â†’ fv**

**0 â†’ 0**means payment is timed at the

**end of the period**.

- Subsequently, press
**ENTER**.

As a result, you the* Annual Rate* for the first set of data as marked in the following picture.

- Following that, you can get the remaining
*Annual Rates*by using the**AutoFill**option.

#### 3.2 Interest Rate with Periodic Payments

On the contrary, if **periodic payments** are included as shown in the image given below, then we will use the following steps to compute the *Interest Rate*.

__Steps:__

- Firstly, use the formula given below in cell
**G5**.

`=RATE(D5,-E5,-F5,C5,0)`

Here,**D5 â†’ nper**

**-E5 â†’ pmt**

**-F5 â†’ pv**

**C5 â†’ fv**

**0 â†’ 0**means payment is timed at the

**end of the period**.

- Now, press
**ENTER**.

Consequently, you will see the following output on your worksheet.

- Finally, use the
**AutoFill**option to obtain the remaining*Annual Rates*for other*Account Holders*.

**Read More: ****How to Calculate Present Value of Future Cash Flows in Excel**

### 4. Computing Number of Periods

We can calculate the **Number of Periods** quite easily by using the **NPER function**. Here, in the following dataset, we have **Present Value**, **Future Value**, and **Annual Rate** for some **Account Holders**. Now, we will compute the **Number of Periods**.

#### 4.1 Number of Periods Without Periodic Payments

Letâ€™s learn the steps to determine the *Number of Periods* when there are no **periodic payments**.

__Steps:__

- Firstly, enter the following formula in cell
**F5**.

`=NPER(D5,0,-E5,C5,0)`

Here,**D5 â†’ rate**

**0 â†’ pmt**

**-E5 â†’ pv**

**C5 â†’ fv**

**0 â†’ 0**means payment is timed at the

**end of the period**.

- Next, hit
**ENTER**.

As a result, we will get the following output as marked in the image given below.

- At this stage, we can get the remaining outputs by using the
**AutoFill**feature of Excel.

#### 4.2 Number of Periods with Periodic Payments

On the other hand, if there are** periodic payments** included as shown in the following picture, we will follow the steps mentioned below to calculate the *Number of Periods*.

__Steps:__

- Firstly, enter the following formula in cell
**G5**.

`=NPER(D5,-E5,-F5,C5,0)`

Here,**D5 â†’ rate**

**-E5 â†’ pmt**

**-F5 â†’ pv**

**C5 â†’ fv**

**0 â†’ 0**means payment is timed at the

**end of the period**.

- After that, press
**ENTER**.

Consequently, you will get the output for the first set of data as shown in the following image.

- Now, by using the
**AutoFill**option of Excel, we can get the remaining outputs for the other Account Holders.

**Read More: ****How to Calculate Present Value in Excel with Different Payments**

### 5. Determining Payment Per Period

In this portion of the article, we will determine the **Payment Per Period** by using the **PMT function** in Excel. In the dataset given below, we have **Present Value**, **Annual Rate**, **Number of Years**, and **Future Value** for some **Account Holders**. Our aim is to find the *Payment Per Period*.

#### 5.1 Payment Per Period for a Zero Future Value

Firstly, we will calculate the* Payment Per Period* for a **Zero Future Value**. **Zero Future Value** means that after the time period you will not have any money in your hand. For example, when you repay a loan, you donâ€™t get any money after the completion of the repayment. So, in this case, the **Future Value is Zero**.

Letâ€™s follow the steps mentioned below to determine the *Payment Per Period* for a** Zero Future Value**.

__Steps:__

- Firstly, enter the formula given below in cell
**G5**.

`=PMT(D5,F5,-C5,0,0)`

Here,**D5 â†’ rate**

**F5 â†’ nper**

**-C5 â†’ pv**

**0 â†’ fv**

**0 â†’ 0**means payment is timed at the

**end of the period**.

- Following that, hit
**ENTER**.

Subsequently, you will get the *Payment Per Period* for** Peter**.

- Now, use Excelâ€™s
**AutoFill**option to obtain the remaining outputs as marked in the following image.

#### 5.2 Payment Per Period for a Non-Zero Future Value

Now, we will calculate the *Payment Per Period* for a **Non-Zero Future Value**. **Non-Zero Future Value** means that you will have a lump sum amount at the end of the time period.

For instance, suppose you want to accumulate **$5000** after **3 **years at a **5%** annual interest rate. You currently have **$500**. So, you want to calculate the amount of money that you need to save per period. As you are getting** $5000** at the end of **3** years, **$5000** is the **Future Value**. In this article, we have used the* Future Value *marked in the following image.

**Steps:**

- Firstly, insert the following formula in cell
**G5**.

`=-PMT(D5,F5,-C5,E5,0)`

Here,

**D5 â†’ rate**

**F5 â†’ nper**

**-C5 â†’ pv**

**E5 â†’ fv**

**0 â†’ 0**means payment is timed at the

**end of the period**.

- Now, hit
**ENTER**.

** Note:** Here negative sign is used before the function to avoid the negative sign in the output.

Consequently, you will see the following image on your screen.

- Following that, by using the
**AutoFill**option of Excel, you can get the rest of the outputs as marked in the following image.

**Read More: ****How to Calculate Future Value in Excel with Different Payments**

## Conclusion

Finally, we have to the end of the article. I sincerely hope that this article was able to guide you to **calculate time value of money in Excel**. Please feel free to leave a comment if you have any queries or recommendations for improving the articleâ€™s quality. To learn more about Excel, you can visit our website, **ExcelDemy**. Happy learning!