This tool is part of WCLN's Sr. Math courses.
Thanks to Brittany Miller who was the lead programmer for this TVM media piece.
Understanding the variables:
|Present Value (pv)
|What is the value of the loan situation at the start of the scenario? If you are putting the money into an investment, it'll be a negative (leaving your pocket).
|Future Value (fv)
|What is value of the loan situation at the end of the scenario? Since this is the money that you could take out of an investment, it'll be a positive (entering your pocket).
The periods (N):
|This is the interest rate for the loan. This is entered as a percentage (not the decimal form) and is the interest rate per year.
|This is the payments that go into or out of your account (if no payments involved, enter 0). If payments are going into the account, they should be negative (out of your pocket). If payments are coming out of the account, they should be positive (into your pocket).
If payments are involved, enter the number of payments that happen each year. If there are NO payments involved, enter 1.
|For compounding, how many times is the investment compounded each year. If NO compounding involved, enter 0.
|When are payments being made (at start or end of the compounding periods)? The default is that they are at the END, so assume END unless they say otherwise.
The greatest area of confusion with the use of any TVM solver is the use of negatives. Positives and negatives are your way to clearly explain the situation.
If you can visualize the value "coming into your pocket," then enter it as a positive.
If you can visualize the value "going out of your pocket," then enter it as a negative.