Time Value of Money Calculator

The calculator treats your lump-sum principal and your stream of periodic payments as two independent growth processes because they compound differently. The principal grows on its own via PV × (1+r)^n, while each periodic payment starts compounding from whenever it's contributed, which the future-value-of-an-annuity formula, PMT × [((1+r)^n − 1) / r], handles correctly. Adding the two results together gives the true combined future value.

Yes — the payment input explicitly allows negative values, and the formula treats them exactly the same way as deposits, just subtracting rather than adding to the growing balance. This lets you model a retirement drawdown scenario, where a starting lump sum shrinks over time as you withdraw a fixed amount each period, alongside its own ongoing compounding.

Effective Annual Rate is computed as (1 + r)^(compounding periods per year) − 1, where r is your annual rate divided by the compounding frequency. Any time compounding happens more than once a year, this always yields a rate above the stated nominal rate, because interest is being calculated on previously accrued interest within the same year — the more frequent the compounding, the larger that gap becomes.

It's only a rough illustration — the calculator uses a fixed 3% annual inflation rate hardcoded into the formula rather than a value you can adjust here. If your inflation expectation differs from 3%, or you want to test different inflation scenarios, pair this tool with a dedicated inflation-impact calculator that lets you set the rate directly.